Ella 
The Japanese yen (JPY) pared strong intraday gains against the US dollar (USD) and helped USD/JPY recover from sub-141.00 levels, or the lowest levels since late July hit earlier this Thursday. Count the points. The recent rebound in global stock markets continues what has been painted as a potentially risky environment and is seen as a key factor in weakening the yen’s relative safe-haven status. Still, speculation that the Bank of Japan (BoJ) may exit its negative interest rate policy sooner than expected is likely to continue to boost the currency ahead of the outcome of labor talks between major companies.
In addition to this, the ongoing dollar selling bias triggered by the Federal Reserve’s dovish turn on Wednesday helped to restrain the intraday rebound in USD/JPY. In fact, the U.S. central bank marked the end of its policy tightening campaign at its policy meeting in late December, with a so-called “dot plot” indicating a series of rate cuts in 2024. This caused U.S. Treasury yields to fall further and was seen as weighing on the dollar. Still, the divergence in the Bank of Japan-Federal Reserve outlook, as well as a narrowing of U.S.-Japan interest rate differentials, are likely to continue to favor the yen.
