BoJ minutes lift the Yen as markets look to Ueda and US NFP on Friday

• Having surged towards 159.00 on Tuesday, USD/JPY has returned below 158.00 to its pre-rally level.
• Expectations of a December rate rise strengthened following the BoJ minutes, while US technology shares declined.
• Friday brings US payrolls data alongside a speech from BoJ Governor Ueda.

Bank of Japan (BoJ) minutes pointing towards a December rate rise have helped lift the Yen on Thursday, with falling US technology shares providing further support. The Japanese currency is strengthening against the Dollar even as the latter advances against the Pound, the Euro, the Kiwi and the Aussie. From Tuesday's peak just below 159.00, the highest since mid-October, USD/JPY has retreated to just above 157.50.

An eight-to-one vote on 30 October kept the BoJ's rate at 1.25%, although board member Takata favoured 1.5%. Its next meeting takes place on 17-18 December. That division was highlighted in Thursday's minutes, with the rate gap relative to the Fed's 3.75%-4.00% standing at two and a half percentage points or more. Provided the Fed leaves rates unchanged, a December BoJ increase would narrow the gap by a quarter-point.

Market pricing for the Fed's 9 December decision is close to 70%. On Thursday, Cleveland Fed President Hammack said policy needs to become restrictive, having voted for a rate rise on 28 October. Should Washington raise rates on 9 December and Tokyo follow on 18 December, the differential would remain unchanged. Thursday's decline in US technology shares has also contributed to the Yen's advance.

Earnings and policy speeches precede rate decisions

Japanese labour cash earnings for September are due at 23:30 GMT on Thursday. Annual growth is forecast at 3.8%, matching August's figure. A speech by BoJ Governor Ueda follows at 16:00 GMT on Friday. Both will inform the BoJ's 17-18 December decision, its final one of the year.

A 65K increase is expected in October Nonfarm Payrolls (NFP), following September's 29K gain, when the figures are released on Friday at 13:30 GMT. Earlier that day, New York Fed President Williams is scheduled to speak at 09:30 GMT. The October Consumer Price Index (CPI), due on Tuesday, 10 November, at 13:30 GMT, is forecast at 0.3% after 0.6%. That release will inform the Fed's 8-9 December meeting.

USD/JPY returns to its established trading range

Following the latest reversal from just below 159.00 at Tuesday's high, USD/JPY has moved back into the 156.00-159.00 range in place since late September. Both the 50-day Exponential Moving Average (EMA) and the 200-day EMA lie within a quarter-Yen of 158.00, with the pair trading just beneath them.

Daily price chart for USD/JPY