The Japanese Yen (JPY) attracts some buyers during the Asian session on Thursday and recovers a part of the previous day's heavy losses in reaction to the hawkish Bank of Japan (BoJ) expectations.
In fact, Minutes from the BoJ's July meeting revealed that board members expect the central bank to keep hiking if inflation and the economy move as estimated. This underscores mounting pressure within the central bank to phase out the massive monetary stimulus. Apart from this, the cautious market mood turns out to be another factor driving some safe-haven flows towards the JPY.
Meanwhile, the growing acceptance that the BoJ will stick to its policy normalization path marks a significant divergence in comparison to rising bets for two more interest rate cuts by the Federal Reserve (Fed) this year. The latter keeps a lid on the overnight US Dollar (USD) rally to a two-week high.
Moreover, expectations for a further narrowing of the US-Japan rate differential benefit the lower-yielding JPY and drag the USD/JPY pair away from a three-week top touched on Wednesday. Traders now look forward to key inflation figures from Japan and the US on Friday.
Source: FXstreet.com
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