USD/JPY drops below 156.00 amid suspected BoJ intervention

• USD/JPY loses momentum around 155.75i in Thursday’s early Asian session, down 0.30% on the day. 
• Japan's exports rose for a seventh consecutive month in June. 
• Rising odds of US rate cuts and the Fed’s dovish messages are likely to cap the pair’s upside. 

The USD/JPY pair attracts some sellers near 155.75 on Thursday during the early Asian trading hours. The pair edges lower on the weaker US Dollar (USD) broadly and speculation of the Bank of Japan (BoJ) intervention. The US weekly Initial Jobless Claims and the Philly Fed Manufacturing Index are due on Thursday, along with the Fed’s Lorie Logan speech. 

Traders suspect another foreign exchange (FX) intervention from the Japanese authorities to support the Japanese Yen (JPY) from multi-decade lows. This, in turn, might underpin the JPY in the near term and cap the upside for the pair. 

Data released by the Ministry of Finance on Thursday showed that Japan's Trade Balance for the year ended in June climbed to ¥224B versus ¥-1,220.1B prior, better than the estimated. Meanwhile, the country’s Exports grew by 5.4% YoY in June from a rise of 13.5% in May, below the forecast of 6.4%. Imports increased 3.2%, compared to the previous 9.5%, below the market consensus of 9.3%. 

On the USD’s front, the markets see a small chance for a rate cut of at least 25 basis points (bps) at the Fed's July meeting, but pricing in 100% odds of a September reduction, according to the CME FedWatch Tool. The rising bets on the Fed rate cut exert some selling pressure on the Greenback against the JPY. 

Furthermore, dovish bets on the Fed continue to undermine the USD in the near term. Fed Governor Christopher Waller said on Wednesday that the US central bank is ‘getting closer’ to an interest rate cut. Meanwhile, Richmond Fed President Thomas Barkin stated that easing in inflation had begun to broaden and he would like to see it continue.”