Narrowing Interest Rate Gap Between the U.S. and Japan Has Led to Yen Buying

Japanese yen's (USDJPY) recent gains against the greenback are accelerating, with the yen hitting its highest level since mid-September on speculation that the Federal Reserve will cut interest rates in 2024 regardless of the inflation data readings.

The yen, which was trading at 151 to the dollar a few weeks ago, rose above 147.65 on Wednesday November 29 before easing slightly.

This follows comments from hawkish Federal Reserve Board of Governors member Christopher Waller yesterday that interest rates may have reached a ceiling and could be cut if inflation continues to slow. Meanwhile, U.S. GDP QoQ 2nd estimate showed actual annual growth by 5.2% (against forecast of 5% and previous data of 4.9%).