BoJ Hawkishness vs. Fed Rate Hopes: USD/JPY Consolidates Near August Highs
The Japanese Yen is consolidating near its August highs against the US Dollar as diverging forces weigh on the currency pair. The Bank of Japan's hawkish repricing and a suspected intervention are supporting the JPY, while USD bulls await this week's US inflation figures for cues on Fed rate hikes.
Spot prices for USD/JPY currently trade below 156.00, but the downside is cushioned by mixed fundamental cues. Traders have fully priced in a 25 basis point BoJ rate hike at its next meeting on September 17-18 and see a potential follow-up move in December.
The better-than-expected US Nonfarm Payrolls report increased chances of a Fed rate hike, but USD bulls are hesitant to place fresh bets. Instead, they will wait for the release of the latest US inflation figures, the Producer Price Index (PPI) and Consumer Price Index (CPI) on Thursday and Friday.