Stronger-than-expected US services data bolsters USD demand, pressuring JPY as Fed rate cut bets fade.
The USD/JPY pair hovers near 159.98, just below the 160.00 mark, as the US Dollar strengthens on robust economic data. The ISM Services PMI climbed to 54.5 in May, up from 4.5 in April, exceeding forecasts and signaling resilient US growth.
The data reinforces expectations that the Federal Reserve may delay interest rate cuts, contrasting with cautious market sentiment for the Japanese Yen. Earlier, Bank of Japan Governor Kazuo Ueda signaled potential rate hikes if inflation risks escalate, though the JPY remains under pressure.
The BoJ previously intervened when USD/JPY breached 160.00 in late April, driving the pair down from 160.72 to 155.55. Ueda warned of broader inflation risks from higher energy prices but reiterated a gradual tightening approach if inflation aligns with projections.