Ella 
The yen extended losses against the dollar for a second consecutive day on Tuesday. Traders remained cautious ahead of a Bank of Japan (BoJ) policy meeting on Wednesday that could lead to a rate hike. Market speculation is that the Bank of Japan may raise interest rates by 10 basis points to 0.1%, and it is widely expected to announce a reduction in bond purchases.
Japan’s Chief Cabinet Secretary Yoshimasa Hayashi said on Tuesday that the Bank of Japan and the government will coordinate closely, but the specific details of monetary policy remain the Bank of Japan’s prerogative. Lin Fangzheng emphasized that the Bank of Japan will work closely with the government to implement appropriate monetary policies to achieve the inflation target.
The dollar may face challenges as the U.S. Federal Reserve is expected to keep interest rates unchanged on Wednesday. However, traders expect the Fed to cut interest rates in September, with the CME FedWatch tool showing a 100% chance of a rate cut of at least 25 basis points. In addition, signs of cooling U.S. inflation and easing labor market conditions have also fueled expectations that the Federal Reserve will cut interest rates three times this year.
