Anna 
The Japanese yen (JPY) recorded its third consecutive day of losses on Thursday, reaching a fresh two-week low against the US dollar (USD) during European markets. The decline was triggered by the release of data indicating a contraction in Japanese factory activity at the fastest pace in 10 months in December. The devastating 7.6 magnitude earthquake on New Year’s Day also played a role in weakening the yen.
Despite doubts about an early interest rate cut by the Federal Reserve, which has supported U.S. Treasury yields and benefited the dollar, dollar bulls remain cautious. The anticipation of a potential interest rate cut by the Federal Reserve as early as March, coupled with the upcoming Non-Farm Payrolls (NFP) report on Friday, has tempered the enthusiasm of dollar bulls.
The NFP report is expected to influence the future policy actions of the Federal Reserve and drive demand for the USD. Traders are closely monitoring the U.S. economic calendar on Thursday, particularly the release of the ADP private sector employment report and the usual initial jobless claims data.
While the Bank of Japan (BoJ) is expected to shift its stance in the near future, and the risk tone softens, the safe-haven yen may face limited losses. This dynamic could restrain further appreciation in USD/JPY, prompting bullish traders to exercise caution in their positions.
