Ella 
In early Asian trading on Thursday, USD/JPY surged above the 148.00 mark after rebounding from a low of 147.47. The U.S. dollar’s gains were supported by the Federal Reserve’s hawkish stance after Wednesday’s policy meeting. At press time, USD/JPY was trading at 148.41, up 0.05% on the day. However, traders remained cautious as Japanese authorities intervened verbally earlier on Wednesday.
At its September meeting, the Fed kept interest rates unchanged at 5.25-5.50%. Officials are increasingly confident that they can lower inflation without damaging the economy or causing massive job losses. The benchmark overnight rate is likely to rise one more time this year, to a peak range of 5.50% to 5.75%, and rates may tighten significantly by 2024 than previously expected, according to the Fed’s most recent quarterly forecast.
Additionally, the Fed revised its Summary of Projections (SEP) to indicate that Fed officials expect interest rates to reach 5.1% by the end of 2024 (previously 4.6%). Although the Federal Reserve has temporarily stabilized interest rates at 5.5%, the Fed’s “higher interest rates are better” attitude has still promoted the trend of the US dollar against other currencies.
On the other hand, the Bank of Japan’s interest rate decision will be the focus of economic events on Friday. The Bank of Japan is widely expected to maintain its short-term interest rate target of -0.1% and its 10-year bond yield target of around 0%. The Bank of Japan has previously announced that it will not consider adjusting monetary policy until local wage and inflation data meet its expectations.
In addition to this, the mood among traders turned cautious due to concerns about verbal intervention. Takehiko Nakao, a former top currency diplomat, told Reuters on Wednesday that Japanese authorities may intervene again to support the yen if it falls further. Previously, Japan’s top official in charge of foreign exchange affairs, Masato Kanda, said that the Japanese authorities are handling foreign exchange trends with a high sense of urgency. This in turn has put some selling pressure on the Japanese yen (JPY) and is a tailwind for USD/JPY.
Next up on Thursday are U.S. weekly jobless claims, the Philadelphia Fed and existing home sales. Focus will turn to Friday’s Bank of Japan (BoJ) interest rate decision. Traders will be looking for USD/JPY trading opportunities from these events.
