According to FXStreet, on October 16, the Japanese Yen (JPY) continued to strengthen against the USD and reversed most of the decline in previous days.
Accordingly, the sharp decline in the US stock market overnight, along with lingering geopolitical risks, became the main factor driving capital flows into the JPY, which is considered a safe-haven asset.
But in the context of Japan, the Japanese Yen is struggling to capitalize on the previous day's recovery against the USD, with dovish comments from BoJ Governor Kazuo Ueda and unexpected opposition to further rate hikes from Japanese Prime Minister Shigeru Ishiba raising uncertainty about monetary policy.
Uncertainty over the Bank of Japan's (BoJ) interest rate hike plans remains a drag on any meaningful price gains.
Japan's core machinery orders in August, a volatile indicator seen as a proxy for capital spending in the next six to nine months, came in below expectations, data showed.
Since manufacturing accounts for about 15% of Japan’s workforce, weak orders could weigh on the labor market, leading to slower wage growth, weaker consumer spending and making it harder for the BoJ to raise interest rates. This has contributed to slowing the yen’s rise.
Globally, the US dollar remained near its highest level in more than two months, thanks to expectations that the US Federal Reserve (Fed) will gradually cut interest rates next year.
San Francisco Federal Reserve President Mary Daly said on Tuesday that the US central bank has made significant progress in curbing inflation and forecast one or two more interest rate cuts this year if economic forecasts are met.
Overall, despite the strength of the JPY, JPY investors appear indecisive due to doubts about the BoJ's rate hike plans.
According to Lao Dong, at 11:00 a.m. on October 16, the USD/JPY exchange rate is currently fluctuating between 148.89-149.34, meaning 1 USD is exchanged for about 149 Japanese Yen.
