USD/JPY corrects to near 152.00, more upside likely amid BoJ rate hike uncertainty

• USD/JPY falls due to mild correction in the US Dollar.
• US flash S&P Global PMI for October came in better than projected.
• Investors doubt whether the BoJ will hike interest rates again in the remainder of the year.

The USD/JPY pair falls to near 152.00 in Thursday’s North American session after refreshing a 12-week high near 153.20 on Wednesday. A mild correction in the asset is purely driven by a temporary pause in the US Dollar’s (USD) rally for a while.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects to near 104.20 after revisiting the August high of 104.50.

The Greenback remains near its intraday low, although the flash S&P Global PMI data for October has come in better than expected. The report showed that activities in the service sector expanded at a surprisingly faster-than-expected pace to 55.3. Economists expected the Services PMI to have grown at a slower pace to 55.0 from 55.2 in September. Meanwhile, the Manufacturing PMI contracted for the fourth straight month but at a slower-than-expected pace to 47.8.

Meanwhile, the outlook of the US Dollar remains firm as the Federal Reserve (Fed) is expected to pursue the interest rate cut path at a moderate pace. Also, growing uncertainty over the United States (US) presidential elections has improved the US Dollar’s appeal as a safe haven.

In the Tokyo region, investors doubt whether the Bank of Japan (BoJ) will hike interest rates again after slightly dovish guidance from Governor Kazuo Ueda. "When there's huge uncertainty, you usually want to proceed cautiously and gradually," Ueda said on Wednesday, Reuters reported. The comments from Ueda also indicated that the BoJ need to more time to gain confidence about inflation sustainably achieving 2% target.