The USD/JPY pair surged above 143.00 in Monday’s North American session, driven by dovish comments from Japan’s new Prime Minister, Shigeru Ishiba. Ishiba stated that monetary policy should remain accommodative given current economic conditions.
Investor Focus on Interest Rates:
Investors will be watching the Bank of Japan’s (BoJ) Summary of Opinions (SOP) for clues on future interest rate moves. The BoJ maintained its current interest rate policy in its September meeting but indicated a data-dependent approach.
US Dollar Gains Ahead of Fed Chair’s Speech:
The US Dollar (USD) strengthened, supported by a recovery in the US Dollar Index (DXY). Investors are anticipating Federal Reserve (Fed) Chair Jerome Powell’s speech for guidance on interest rate cuts in the remaining months of the year.
Fed Rate Expectations:
The CME FedWatch tool suggests that the Fed is likely to reduce interest rates by 75 basis points (bps) in total for the rest of the year, with a potential 50 basis point cut in November or December.
