USD/JPY dips below 147.50 with the Dollar weighed amid the risk-on mood 

• US Dollar's recovery against the yen has been halted at 147.80.
• Weak US labour data and the US Government shutdown have hammered the US Dollar this week
• The Focus today is on September's Final US Services PMIs and Fed Jefferson's speech.

The US Dollar’s rebound against the Japanese Yen has lost momentum during Friday’s European Morning session, as the pair retreated from daily highs at the 147.80 area to levels around 147.30 at the moment of writing.

The pair rallied from two-week lows at 146.55 on late Thursday’s trading and Friday’s Asian session, as comments by DallasFed President Lorie Logan and BoJ Governor Kazuo Ueda dented the Yen-supportive monetary policy divergence.

Markets remain confident on further Fed cuts

On Thursday, the Dallas Fed president Lorie Logan affirmed that the bank needs to be “very cautious” with rate cuts, as inflation keeps trending higher and added that she is not eager to ease monetary policy further. 

These comments provided some impetus to the US Dollar’s recovery, which was further underpinned by BoJ Governor Ueda, who warned about global uncertainty and left traders puzzled about the bank’s upcoming monetary policy decisions.

The pair, however, is losing momentum, with investors' hopes that the Fed will cut rates in October and December practically intact. The downbeat employment data seen this week, namely the unexpected decline in the ADP Employment Change, and the US Government shutdown, have endorsed those views.

Investors' focus is now on September’s US services activity figures, that is expected to show moderate growth, although the new orders and employment sub-indexes might muddle the impact of the headline reading. These figures are likely to provide a fresh context to Fed Vice Chair Philip Jefferson’s speech, due later today.