The yen continued to decline without any reports of intervention, while USD/JPY fell to the low 156s. The market is closely watching developments ahead of expectations for a BOJ rate hike and the release of US employment data.
After the yen rose for 2 consecutive days without any reported foreign-exchange intervention, USD/JPY fell from just below 159.00 to just below 155.50 before recovering to just below 156.00. The move clearly broke below the 200-day exponential moving average (EMA) around 158.00. After reaching slightly above 160.00 intraday, the pair again approached around 155.00. The rebound from the intervention low had also been supported by the monetary policy differential, but this week has seen changes in the policy outlook in both Japan and the United States.
Regarding the outlook for US monetary policy and economic indicators, reports suggested that a Federal Reserve governor could indicate that rates may be held steady if inflation data remain moderate, and the probability of a September rate hike has been trending lower. Meanwhile, according to an announcement by Japan's Ministry of Finance, funds on one of the largest-ever scales were deployed for yen-buying intervention between the end of July and 26 August. Attention is now focused on the upcoming US employment report (NFP), which is expected to show an increase exceeding the decline recorded in the previous month.