Anna 
On Thursday, the Japanese yen (JPY) experienced robust buying momentum, surging above a three-month high against the US dollar, fueled by growing expectations of a significant shift in the Bank of Japan’s (BoJ) policy stance. Bank of Japan Governor Kazuo Ueda’s meeting with Prime Minister Fumio Kishida intensified market speculation as Ueda hinted at the possibility of rising wages in his explanation of monetary policy. This development has ignited conjecture that the Bank of Japan may contemplate unwinding a decade-long monetary stimulus, particularly with the prospect of a second consecutive year of substantial wage increases.
This shift in the BoJ’s stance sharply contrasts with expectations for the Federal Reserve (Fed), which is anticipated to conclude its policy tightening campaign and potentially initiate interest rate cuts in 2024. Concurrently, the yen benefits from its relative safe-haven status amid broad equity market weakness.
In response to these developments, the US dollar retraced from its two-week high reached on Wednesday, causing USD/JPY to dip further below the 146.00 mark, reaching its lowest level since early September. Traders are now closely monitoring the upcoming weekly initial jobless claims data from the United States, expecting it to provide momentum in North American markets.
Market attention is poised to shift to final gross domestic product (GDP) data scheduled for release on Friday, although the spotlight remains on the eagerly awaited monthly U.S. employment data – the non-farm payrolls report – slated for Friday. Against this backdrop, the fundamental landscape seems to favor JPY bulls, indicating that the path of least resistance for USD/JPY is to the downside. As markets continue to digest central bank dynamics and economic indicators, the Japanese yen remains a focal point for currency traders navigating the evolving financial landscape.
