Ella 
USD/JPY resumed its uptrend in the Asian market and ended its two-day losing streak to a 1.5-week low near 144.50 (the day before yesterday). Spot prices are currently just above the psychological mark of 145.00, up 0.25% on the day, although the fundamental backdrop makes it prudent to bet on further gains.
A broad rally in Asian stock markets weakened the safe-haven yen and boosted USD/JPY. Hopes for more stimulus from China and signs of a de-escalation in the U.S.-China trade conflict boosted investor confidence. It is worth recalling that the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced earlier this week that it had removed 27 Chinese entities from its “Unverified List.” The Chinese side welcomed this and said it is conducive to the normal trade between the two countries.
Also, the huge policy divergence between the Bank of Japan and other major central banks kept the pair maintaining a buy tone. In fact, the Bank of Japan is the only central bank in the world to maintain negative interest rates. In addition, policymakers emphasized that sustainable wage increases are a prerequisite for considering the removal of large-scale monetary stimulus. Nonetheless, the looming recession risk provided some support for the yen and capped further gains in the USD/JPY pair, so bullish traders need to be cautious.
Against the backdrop of deteriorating economic conditions in China, a series of manufacturing surveys on Wednesday pointed to a gloomy picture of the health of the global economy, fueling fears of a further global downturn. Also, flash U.S. Purchasing Managers’ Index (PMI) data for August showed business activity approaching a standstill. That, in turn, forced investors to scale back bets on further policy tightening by the Federal Reserve, keeping the dollar (USD) below Wednesday’s more than two-month highs and holding the greenback against the yen (USD/JPY ). JPY) currency pair suppressed.
Still, investors remain uncertain about when the Fed will pause its rate-hike cycle or start cutting rates. Market focus therefore remains on the key Jackson Hole meeting, with Fed Chairman Jerome Powell’s comments to be closely watched for clues on the path of future rate hikes. This will affect the dollar and determine the next move of USD/JPY. Meanwhile, traders on Thursday will take cues from U.S. jobless claims and durable goods orders data for some impetus.
