USD/JPY advances towards 145.00 on Fed’s hawkish roadmap, BOJ policy eyed

• USD/JPY is inching higher to capture 145.00 amid Fed’s hawkish guidance on interest rates.
• A fight towards bringing price stability seeks sacrifices from growth rate and labor market.
• The Japanese government could intervene in currency markets at any moment.

The USD/JPY pair has extended its gains after overstepping the immediate hurdle of 144.00 in the early Tokyo session. The asset is looking to recapture Wednesday’s high at 144.70, considering the strength of the greenback bulls. For the first time in the past 24 years, the major is aiming to smash the critical hurdle of 145.00. The asset is expected to achieve the same on hawkish guidance by the Federal Reserve (Fed).

Fed’s September monetary policy meeting resulted in a rate hike by a third consecutive 75 basis points (bps). This pushed the terminal rate to 3.00-3.25%. Fed chair Jerome Powell has denied recession signals for now but has elevated targets for Unemployment Rate.

The central bank has warned over declining employment opportunities and has put forward a gloomy outlook on the growth rate.  The show-stopper announcement was dictating a peak for the terminal rates, which spilled blood on Wall Street and sent risk-perceived currencies into bearish territory. The Fed believes that the interest rates will top around 4.6% and the institution will hike them to 4.4% by the end of 2023.

The roadmap of fighting the inflation chaos is full of sacrifices by the growth rate, labor market, household sector, and durable goods demand.

On the Tokyo front, the interest rate decision by the Bank of Japan (BOJ) will clear the further path for the asset. The BOJ is expected to shift to a ‘neutral’ stance and won’t announce more stimulus. The inflation rate is responding effectively and is expected to continue its modest increment. The odds of intervention in the Fx moves by the BOJ have bolstered after the commentary from Japan’s former Vice Finance Minister Tatsuo Yamasaki.

Japan’s former Vice FM Yamasaki cited that the Japanese administration is ready to intervene in currency markets at any moment if needed, news wires from Bloomberg. He further added that the government doesn’t need to wait for a green light from the US to support the yen.