FX.co ★ Japanese Yen Weakens on Dollar Strength

The yen continued its decline against the dollar on Monday, crossing the 148 mark, as the dollar appreciated in anticipation of upcoming comments from Federal Reserve officials and a critical U.S. inflation report. Last week, the Federal Reserve implemented a widely expected quarter-point interest rate cut, marking its first reduction since December, and indicated the possibility of two additional cuts by year-end. In contrast, the Bank of Japan maintained its policy rate at 0.5% for the fifth consecutive meeting on Friday, aligning with expectations. The central bank noted that the Japanese economy is experiencing moderate recovery but acknowledged certain weaknesses and expressed concerns over potential impacts from global trade policies. Additionally, the Bank of Japan unanimously decided to commence the sale of its ETF and J-REIT holdings, suggesting a subtle change in its asset purchase strategy. Looking forward, investors are focusing on Japan’s upcoming PMI and Tokyo’s inflation figures, along with the release of the minutes from the Bank of Japan’s July meeting, which may provide insights into the central bank's short-term policy direction.