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In early Asian trading on Tuesday, USD/JPY strengthened to around 154.10. A slight rebound in the greenback from three-week lows to 105.1 provided support for USD/JPY’s recovery. Minneapolis Fed President Neel Kashkari will speak later Tuesday.
Last week’s U.S. non-farm payrolls (NFP) and services purchasing managers’ index (PMI) were not optimistic, prompting market expectations that the Federal Reserve will cut interest rates this year. Traders expect the Fed to begin lowering borrowing costs at its September meeting. However, Fed Governor Michelle Bowman said last week that she would be inclined to raise interest rates further if progress towards lowering inflation to 2% stalls or reverses.
RICHMOND: Federal Reserve Bank President Thomas Barkin said on Monday that he has yet to see evidence that the fight against inflation is on track, adding that a strong job market will give officials time to gain confidence that inflation will fall. Meanwhile, New York Fed President John Williams noted that a rate cut will eventually come. Williams further said that seeing modest job growth, the Fed was looking at “broader” economic data. Investors will be watching the Fed’s speech this week. A dovish tone from Fed officials could put some selling pressure on the U.S. dollar against major currency pairs.
In terms of the Japanese yen, market risk sentiment has strengthened, continuing to suppress safe-haven currencies such as the Japanese yen. Earlier on Tuesday, Japan’s top foreign exchange official Masato Kanda said Japanese authorities may take necessary measures to deal with excessive market volatility, but he did not comment on U.S. Treasury Secretary Janet Yellen’s comments. Comment on remarks about foreign exchange policy. The latest possible intervention by the Japanese government comes after a weaker-than-expected U.S. jobs report for April on Friday.
