USD/JPY gains some ground on BoJ intervention expectations

On Thursday, the USD/JPY pair dropped over 0.30% in the direction of 147.20 on rising anticipation that the Bank of Japan (BoJ) will act to halt the JPY’s collapse. Although the USD is stabilizing, the Federal Reserve’s hawkish wagers have limited the dollar’s potential loss. The pair is roughly trading at 147.08 at the time of writing.

Although the US Bureau of Labour Statistics recorded a rise in applications for unemployment benefits, the actual number was fewer than anticipated. The DXY index, which measures the USD, maintains above the 105.00 region, which is the highest level since March.

After yesterday’s surge in response to positive ISM PMI data from the US for August, US Treasury rates modestly declined but continued to trade near weekly highs. The odds of the Federal Reserve making one more hike in this cycle are still higher in the markets, with the chances of a 25 basis point increase in November and December being close to 40%.

However, once the US CPI statistics from August released next week, predictions could change. To stop “speculative” movements, Japanese banking authorities are mulling an action that might possibly strengthen the JPY. Investors will receive the revised Q2 GDP numbers for Japan on Friday.