The Japanese Yen extended its gains against the US Dollar for the fourth day, hitting a two-week high on Thursday. The recent US-Japan trade agreement has reduced economic uncertainty and revived expectations of another rate hike by the Bank of Japan (BoJ) this year.
BoJ Deputy Governor Shinichi Uchida reaffirmed the central bank’s plan to raise rates if inflation and growth remain on track. A Reuters poll also showed most economists expect a rate hike by year-end, though not at this month’s meeting.
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Despite weak Japanese manufacturing data and political uncertainty
following the ruling coalition’s recent election loss, JPY remained strong. The services sector showed improvement, offsetting some concerns.
Meanwhile, the US Dollar struggled near multi-week lows amid political tensions over the Fed’s independence. Comments about a potential change in Fed leadership and weaker economic sentiment added to the USD’s pressure.
Markets now await US jobless claims and PMI data, along with the ECB’s policy decision, for further direction on USD/JPY.
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