USD/JPY Eases from Near 40-Year High as Yen Struggles Amid Inflation Concerns
The Japanese Yen continued its downward trend on Friday as the USD/JPY pair eased from its near 40-year high of 163.70, down 0.09% on the day.
The divergence in monetary policy between the Federal Reserve and the Bank of Japan remains the primary driver of the pair, with the BoJ's interest rates at 1% being significantly lower than other major economies.
The US Dollar is also supported by recent macroeconomic data, including a rise in the preliminary United States S&P Global Composite Purchasing Managers Index (PMI) to 53.6 in July from 51.9 in June, indicating an acceleration in private sector activity.
According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, the survey is consistent with annualized Gross Domestic Product (GDP) growth of around 2% in the third quarter, although supply chain disruptions and price pressures continue to intensify.