19 September 2024, USD/JPY
USDJPY:
On Thursday, the USD/JPY pair demonstrated a tendency to consolidate around 143.55 during the early European session. The growth of the major pair is driven by the recovery of the US dollar (USD). On Friday, investors will be monitoring the Bank of Japan's (BoJ) interest rate decision.
At its meeting on Wednesday, the Federal Reserve (Fed) reduced interest rates by 50 basis points (bps), setting the new range at 4.75% to 5.00%. At a press conference, Fed Chairman Jerome Powell stated that the decision was a robust but necessary one, given the current weakness in price growth and mounting concerns about the labour market.
In a downward revision, Fed officials have reduced their forecast for GDP growth in 2024 to 2% from the previous estimate of 2.1%. In a further indication of the Fed's confidence in the economy, officials have raised their forecast for the long-term federal funds rate to 2.9% from 2.8%. In the wake of the Fed's decision, the US dollar saw a period of volatility, fluctuating between rises and falls.
In contrast, the Bank of Japan is anticipated to maintain its interest rates at the conclusion of its two-day meeting on Friday. However, the majority of economists surveyed by Reuters anticipate a rate hike by the end of the year. As the Fed initiated a policy of easing monetary policy at its September meeting, a narrowing gap between U.S. and Japanese interest rates could result in a strengthening of the Japanese yen (JPY) against the U.S. dollar.
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