Ella 
The Japanese yen (JPY) gave up recent gains against the U.S. dollar (USD), with trading volumes likely to be lower as Japanese markets are closed for the Mountain Day holiday. Stronger-than-expected U.S. economic data released last week led traders to lower expectations for a rate cut from the Federal Reserve, providing support for USD/JPY.
On Sunday, Federal Reserve Governor Michelle Bowman said she continues to see upward risks to inflation and that the labor market continues to be strong. According to Bloomberg, Bowman suggested the Fed may not be prepared to cut interest rates at its next meeting in September.
The CME Fed Watch tool shows that the probability of the Fed cutting interest rates by 50 basis points at the September meeting is 46.5%, which is significantly lower than the 74.0% reported a week ago.
Last week, Japan’s monetary policy outlook showed that Bank of Japan (BoJ) officials have signaled they are ready to raise interest rates further, although they have become more cautious due to heightened market volatility. At the same time, according to Reuters, Japanese Finance Minister Shunichi Suzuki emphasized that monetary policy decisions fall within the purview of the Bank of Japan and that they will continue to pay close attention to market dynamics.
