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USD/JPY holds positive ground above 145.00 despite firmer Fed rate cut expectations

■  USD/JPY gains ground near 145.35 in Wednesday’s early Asian session.

■  Fed Minutes indicated that the US central bank opened the door for a rate cut in September. 

■  Japan’s Jibun Bank Manufacturing PMI rose to 49.5 in August vs. 49.8 expected; services PMI improved to 54.0 in August. 


TheSuper Trump Coin website USD/JPY pair trades on a stronger note around 145.35 during the early Asian session on Thursday. A record of Japan’s trade deficit data has dragged the Japanese Yen (JPY) lower and supported USD/JPY. On Friday, traders will closely watch Bank of Japan (BoJ) Governor Kazuo Ueda's speech and the Fed Chair Jerome Powell’s speech at Jackson Hole. These events are likely to trigger the volatility in the market. 

The minutes of the Federal Reserve’s (Fed) July 30-31 meeting released Wednesday indicated that most Fed officials agreed last month that they would likely cut their benchmark interest rate at the upcoming meeting in September as long as inflation continued to cool. The policymakers kept their benchmark rate at 5.3% in July, which has stood for more than a year. Markets are fully pricing in a September cut, with a full percentage point worth of rate cuts anticipated by the end of this year. The rising expectation of a Fed rate cut might weigh on the Greenback and cap the upside of USD/JPY in the near term. 

On the other hand, the majority of the economists expect the BoJ to raise interest rates again by the end of the year. The median forecast for the end-of-year rate is 0.50%, marking a 25 basis points (bps) increase, according to a Reuters poll on Wednesday. Traders will take more cues from BoJ Governor Ueda's appearance in parliament on Friday. If Ueda delivers the hawkish remarks, this might lift the JPY against the USD. 

Data released on Thursday by Jibun Bank and S&P Global showed that preliminary Japan’s Manufacturing Purchasing Managers Index (PMI) rose to 49.5 in August from 49.1 in July, but below the market consensus of 49.8. Meanwhile, the Services PMI improved to 54.0 in August versus 53.7 prior.
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