Comments from the BoJ revived activity in the yen market, sending USD/JPY plunging into the ¥158 range. The pair subsequently continued trading in the ¥158 range ahead of the release of U.S. economic data, with U.S. initial jobless claims among today's key market drivers.
In yesterday's New York session, BoJ Policy Board Member Takata Hajime (高田 創) said at a press conference that "two rate hikes a year is the conventional view," suggesting the possibility of flexible and consecutive rate hikes. As speculation grew, buying of the yen intensified and USD/JPY fell to ¥159.43 during Asian hours. Once the New York session began, U.S. ADP employment in August came in below market expectations, drawing attention to the loosening in the U.S. labor market. In addition, New York Fed President Williams suggested that inflation was slowing and that current interest-rate levels were appropriate, sending long-term yields lower. As a result, dollar selling accelerated and USD/JPY briefly plunged to ¥158.19.
During Asian hours today, 3 September, USD/JPY is expected to remain locked in a battle in the ¥158 range. With the release of U.S. and European economic data concentrated in the session, U.S. initial jobless claims, comments by Fed Governor Waller and the August ISM Non-Manufacturing Index are expected to be the main focuses. The market is alert to the possibility that expectations for U.S. rate cuts could strengthen depending on trends in the labor market and changes in sentiment in the services sector.