Japanese Yen might struggle to gain any meaningful traction amid a bearish fundamental backdrop

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  • Bank of Japan Governor Kazuo Ueda earlier this week left markets guessing as to how soon and at what pace could the central bank tighten its monetary policy.
  • Investors are pricing in an even chance of a 25-basis-point rate hike and an on-hold decision at the final BoJ policy meeting of this year on December 18-19.
  • According to mediate reports, the economic package proposed by Japanese Economic Revitalisation Minister Akazawa is expected to be around ¥21.9 trillion. 
  • Comments from Russian and US officials eased market concerns about the onset of a nuclear war, denting demand for traditional safe-haven currencies. 
  • US President-elect Donald Trump's proposed policies could potentially stoke inflation and slow the path of interest rate cuts from the Federal Reserve.
  • Furthermore, Fed policymakers' cautious remarks on further policy easing remain supportive of rising US Treasury bond yields and a bullish US Dollar. 
  • Fed Governors member Lisa Cook noted on Wednesday that the central bank might get forced into a pause on interest rate cuts if inflation progress slows down.
  • Separately, Fed Governor Michelle Bowman said that the progress on inflation appears to have stalled and that the central bank should pursue a cautious approach.
  • Boston Fed President Susan Collins said that more rate cuts are needed, but policymakers should proceed carefully to avoid moving too quickly or too slowly.

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