The USD/JPY pair weakened near 147.75 during the early Asian session on Tuesday. The US dollar (USD) weakened against the Japanese yen (JPY) as investors digested comments from Federal Reserve (Fed) officials on their latest monetary policy stance. Traders await the S&P Global Manufacturing and Services Purchasing Managers' Index (PMI) reports due on Tuesday.
The US central bank delivered a widely expected interest rate cut last week but indicated it was in no rush to lower borrowing costs in the coming months. Fed Chairman Jerome Powell stated in a press conference that the decision was a "risk-management cut" intended to address a weakening labor market while inflation remains relatively high.
On Monday, St. Louis Fed President Alberto Musalem said he supported a rate cut at last week's Fed meeting as a precautionary measure to protect the job market, but said there may be "limited room" for further cuts given inflation is above the Fed's 2% target.
Fed Governor Stephen Miran last week rejected a quarter-percentage-point interest rate cut and supported a sharper 50-bps rate cut, arguing that the Fed's interest rate is too high and too restrictive. Traders will take more cues from Fed Chairman Jerome Powell's speech in Rhode Island on Tuesday.
Meanwhile, political uncertainty in Japan ahead of the Liberal Democratic Party leadership election scheduled for October 4th is contributing to the Bank of Japan's (BoJ) caution regarding further interest rate hikes. This, in turn, could weigh on the JPY in the near term. (alg)
Source: FXstreet
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