Japanese Yen Stumbles Against USD Amid Uncertainty Ahead of Key Events

• The Japanese Yen is losing ground against the US Dollar, giving up some of its recent strong gains.
• Reduced bets for an imminent shift in the BoJ’s policy shift are undermining the JPY.
• Friday’s better-than-expected US monthly job data is supporting the USD.
• Market attention is now focused on the US CPI and the FOMC decision this week.

The Japanese Yen (JPY) continues to depreciate for the second day in a row, pushing the USD/JPY pair to the mid-145.00s as Monday’s European session begins. A report on Friday indicated that Bank of Japan (BoJ) Governor Kazuo Ueda’s comments last week were taken out of context and not meant to signal anything about the timing of a policy change. Weak GDP data and market expectations of an imminent rate hike may be overblown, adding to the pressure on the JPY.

On the other hand, the USD is being supported by a strong monthly jobs report released on Friday, leading traders to bet that the Federal Reserve (Fed) may not begin a series of interest-rate cuts until May 2024. The ongoing recovery move of the USD/JPY pair from a multi-month low last Thursday may be capped due to concerns about a deeper global economic downturn and geopolitical risks.

This week’s key data/event risks, including the US consumer inflation figures and the outcome of the crucial two-day FOMC monetary policy decision, will be closely watched. The Fed’s interest rate projections for the next year, revealed in the “dot plot,” are expected to influence the near-term USD price dynamics, providing impetus to the major. As a result, strong follow-through buying is needed before confirming that spot prices have bottomed out and positioning for additional gains.

Daily Digest Market Movers: Japanese Yen gives back some of its recent strong gains against the US Dollar

• A Reuters report, citing three sources familiar with the matter, said that Bank of Japan Governor Kazuo Ueda’s comments last week were not meant to signal an imminent policy shift.
• This, along with data showing that Japan’s economy contracted more sharply than first estimated in the third quarter, by an annualized 2.9%, is seen undermining the Japanese Yen.
• The US Bureau of Labor Statistics (BLS) reported on Friday that the economy added 199K new jobs in November as compared to the 150K in the previous month and 180K anticipated.
• Additional details of the publication revealed that the Unemployment Rate declined to 3.7% from 3.9% in October, despite a rise in the Labor Force Participation Rate to 62.8% from 62.7%.
• Annual wage inflation,

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