USD/JPY pared early losses on Friday, climbing back toward nine-month highs as the US Dollar found its footing. The pair traded near 154.60 at the time of writing after bouncing from an intraday low around 153.62, leaving it on track for modest weekly gains.
Market sentiment in the US improved following the reopening of the federal government, though caution persists. Investors remain focused on the uncertainty surrounding delayed economic data releases after the record-long shutdown.
US data delays add to market unease
US Labor Secretary Chavez-Deremer said on Friday that the Bureau of Labor Statistics was unable to fully collect the October Consumer Price Index data, raising the possibility that the report may never be released. She noted that September’s employment data has been gathered but still requires processing, with hopes it can be published next week.
Expectations for near-term Federal Reserve rate cuts have eased as officials continue stressing that inflation remains their priority despite signs of labor-market cooling. A steady stream of measured commentary from policymakers has tempered aggressive easing bets. According to the CME FedWatch Tool, the probability of a December rate cut has fallen to around 49%, sharply lower than the 94% seen a month ago.
Kansas City Fed President Jeffrey Schmid said monetary policy should “lean against demand growth,” reiterating that current settings are “modestly restrictive” and appropriate. He added that labor-market softening likely reflects structural shifts in the economy.
Yen pressured by Japan’s fiscal stance and cautious BoJ
On the Japanese side, the Yen remains under pressure as the new government led by Sanae Takaichi signals a more assertive fiscal approach. Coupled with the Bank of Japan’s cautious stance on tightening, this has kept the currency on the defensive.
Japan’s Finance Minister Satsuki Katayama warned that the negative effects of Yen weakness are becoming more pronounced, adding that authorities are monitoring FX moves with a high sense of urgency. With USD/JPY hovering near sensitive levels, traders remain alert to the risk of intervention if the Yen weakens too rapidly.
