Ella 
The Japanese yen (JPY) gave up recent gains on Thursday as the dollar (USD) gained following hawkish comments from the U.S. Federal Reserve (FED), boosting the USD/JPY pair. The Federal Open Market Committee (FOMC) kept its benchmark lending rate in a range of 5.25%-5.50% for the seventh consecutive time at its policy meeting on Wednesday, as widely expected.
The yen’s downside may be limited as caution prevails ahead of the Bank of Japan (BoJ) policy decision on Friday. While the BoJ is widely expected to keep interest rates unchanged, traders will be closely watching for any announcement that the central bank may reduce its monthly bond purchases.
The U.S. dollar index (DXY), which measures the value of the U.S. dollar (USD) against six major currencies, recovered its recent losses. The recovery can be attributed to the hawkish stance of the Federal Reserve. Currently, FOMC policymakers expect only one rate cut this year, down from three projected in March.
The probability of the Fed cutting interest rates by at least 25 basis points in September fell to 61.5 from 69.4% a week ago, according to the CME FedWatch tool.
Investors awaited Thursday’s release of weekly U.S. jobless claims and producer price index (PPI) for further insight into the state of the U.S. economy.
