Japanese Yen ticks up from session lows after the release of mixed US data

• USD/JPY eases below 158.00 following US data releases but remains on track for a 0.7% weekly rally.
• US GDP Growth beat forecasts in Q3, but Personal Income and Spending declined.
• Markets are bracing for a hawkish hold at Friday's BoJ meeting.

The Japanese Yen (JPY) has trimmed some losses against the US Dollar (USD) on Thursday as softer-than-expected Personal Income and Spending data offset the enthusiasm about the bright Gross Domestic Product (GDP) reading. The USD/JPY pair has retreated to the 157.90 area from session highs just above 158.00, although it remains on track for a 0.7% weekly appreciation.

Data from the US Bureau of Economic Analysis revealed that US economic growth accelerated to a 3.4% annualised rate in the third quarter, up from the 2.2% growth in the previous quarter and beating expectations of a 3.2% increase.

Personal Income and Spending decline beyond expectations

Preliminary US Personal Consumption Expenditures (PCE) accelerated to a 3.6% year-on-year pace in September, from 3.4% in August. Personal Income, on the other hand, eased to 0.2% growth against expectations of a steady 0.3% increase, and Personal Spending growth fell to 0.5% from 0.9% in the previous month. These figures hint at softer inflationary pressures from consumer demand and endorse Fed Chairman Kevin Warsh's faith in the bank's monetary policy.

On Wednesday, Federal Reserve (Fed) left rates unchanged, as widely expected, with Warsh’s comments to the press considered tilted to the dovish side. Warsh showed confidence that the “monetary medicine is starting to work, and affirmed that the bank might achieve the 2% inflation target without having to “throw people out of work”

Warsh's comments were seen as a sign that the bank might not have to hike rates as much as the market expects in 2027 and triggered a moderate US Dollar pullback.

The focus now will shift to the Bank of Japan (BoJ), which will release its monetary policy decision during Friday’s Asian session. The BoJ is expected to keep interest rates on hold and hint at a further rate hike in December. Anything different than that would be disruptive. A rate hike is out of the question, and casting any doubt about the unwritten law of quarterly rate-hiking is likely to send the Yen tumbling.