USD/JPY extends decline below 154.00, investors await US GDP data

• USD/JPY remains on the defensive near 153.70 in Thursday’s early Asian session. 
• A higher chance of a BoJ rate hike might support the JPY in the near term. 
• Mixed US S&P PMI for July and the Fed’s dovish comments are likely to weigh on the Greenback. 

The USD/JPY pair remains under some selling pressure around 153.70, the lowest in three months, on Thursday during the early Asian session. The rising bets that the Bank of Japan (BoJ) will cut interest rates next week provide some support to the Japanese Yen (JPY) for the time being. 

The BoJ is likely to debate whether to hike interest rates again next week and unveil a plan to roughly halve bond purchases in the coming years. “This may be due to the fact that ahead of the BoJ's interest rate decision next week, more and more analysts see the risk that an interest rate hike could come now rather than in September. It will also be interesting to see what the BoJ says about its bond purchases and whether it could gradually reduce them.” said Commerzbank FX strategist Antje Praefcke. Additionally, the potential foreign exchange (FX) interventions from Japanese authorities might cap the upside for the pair. 

Multiple headwinds from the US, including a mixed US S&P Purchasing Managers Index (PMI) for July and a dovish stance from the Federal Reserve (Fed), are likely to exert some selling pressure on the USD. The US S&P Global Composite PMI rose to 55.0 in July from 54.8 in June. Meanwhile, the S&P Global Manufacturing PMI dropped to 49.5 from 51.6 in the same period, below the market consensus of 51.7. The Services PMI rose to 56.0 from 55.3, stronger than the expectation of 54.4.