Japanese Yen clings to losses against US Dollar as hawkish Fed bets escalate

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The Japanese Yen (JPY) reflects weakness against the US Dollar (USD) during the European trading session on Thursday, with the USD/JPY pair holding onto the two-week high near 158.00. The pair remains firm due to the continued outperformance of the US Dollar.

The Japanese Yen continues to underperform the US Dollar as traders price out dovish Fed bets.
Rising US inflationary pressures have squeezed out hopes of a Fed interest rate cut this year.
BoJ Summary of Opinions showed that there could be an interest rate hike in the June policy meeting.

So far this week, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is up 0.72% to near 98.55.

US Dollar Price This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.32%	0.30%	0.79%	0.20%	-0.40%	0.04%	0.52%
EUR	-0.32%		-0.04%	0.52%	-0.14%	-0.74%	-0.33%	0.19%
GBP	-0.30%	0.04%		0.06%	-0.13%	-0.73%	-0.29%	0.22%
JPY	-0.79%	-0.52%	-0.06%		-0.66%	-1.20%	-0.76%	-0.24%
CAD	-0.20%	0.14%	0.13%	0.66%		-0.50%	-0.10%	0.32%
AUD	0.40%	0.74%	0.73%	1.20%	0.50%		0.45%	0.93%
NZD	-0.04%	0.33%	0.29%	0.76%	0.10%	-0.45%		0.48%
CHF	-0.52%	-0.19%	-0.22%	0.24%	-0.32%	-0.93%	-0.48%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The US Dollar trades firmly amid firm expectations that the Federal Reserve (Fed) will not cut interest rates the entire year. The CME FedWatch tool shows that the Fed will either hold interest rates steady at their current levels or deliver at least one interest rate hike, with 66.8% possibility of maintaining the status quo.

Traders have priced out dovish Fed bets, following the release of the United States (US) Consumer Price Index (CPI) data for April on Tuesday, which showed that the headline inflation accelerated to 3.8% Year-on-Year (YoY), the highest level seen in almost three years.

Meanwhile, investors await US President Donald Trump’s comments after meeting with Chinese leader Xi Jinping.

On the Japanese Yen front, Bank of Japan (BoJ) Summary of Opinions (SoP) for the April meeting released on Tuesday showed that “an interest rate hike likely from next meeting despite uncertain Middle East outlook”.

In late Thursday’s session, investors will focus on the US Retail Sales data for April, which will be published at 12:30 GMT. The US Retail Sales data, a key measure of consumer spending, is expected to have grown at a moderate pace of 0.5% compared to the previous reading of 1.7%.

Economic Indicator

BoJ Summary of Opinions

This report includes the BOJ's projection for inflation and economic growth. It is scheduled 8 times per year, about 10 days after the Monetary Policy Statement is released.