Anna 
In the Asian session on Wednesday, the USD/JPY currency pair demonstrated resilience, stabilizing above its three-month lows in the mid-147 range. This stability was attributed to slight increases in US Treasury yields and the Bank of Japan’s (BoJ) Deputy Governor Ryozo Himino maintaining a dovish stance, underscoring the commitment to easy monetary policies until Japan’s price stability targets are met.
The modest uptick in US Treasury yields provided support for the dollar’s position, influencing the currency’s value. However, the greenback exhibited signs of weakness as investors increasingly anticipate a potential Federal Reserve rate cut in early 2024. These expectations are fueled by a combination of economic reports indicating a shifting economic landscape.
Complicating the economic outlook, Tokyo’s Core Consumer Price Index (CPI) rose by 2.3% in November, sparking speculation about a potential departure from the BoJ’s long-standing negative interest rate policy.
Tuesday’s trading session witnessed significant volatility for the USD/JPY pair, reaching a low of 146.56 before staging a recovery and closing nearly flat at 147.20. The initial decline in the US dollar was triggered by lower-than-expected JOLTS Job Openings data, suggesting a cooling labor market. However, the currency found support following a robust US ISM Services PMI report, recording a figure of 52.7.
Market attention is now focused on the upcoming ADP Employment Change data, seen as a precursor to Friday’s crucial Non-Farm Payroll (NFP) figures. These data points are essential for gaining further insights into the state of the US labor market and may impact future Federal Reserve policy decisions.
