USD/JPY drifts lower, nearing 152.50 as Fin. Min. Katayama speaks

• The Dollar pulls back from 153.30, approaching the 152.50 area
• Finance Minister Katayama has soothed markets, pointing to US Treasury Secretary Bessent's approval of Takaichi's policies.
• Later this week, the Fed and BOJ's monetary policy decisions might set the USD/JPY's near-term direction.
  

US Dollar rally has been capped at the 153.30 area earlier on Monday, the same area as in early October, and the pair trimmed gains to reach intra-day lows at 152.60 as Japan's Finance Minister Satsuki Katayama spoke to the press, following a meeting with US Treasury Secretary Scott Bessent.

Katayama confirmed close communication with US Secretary Bessent and said that monetary policy issues were not addressed, while he affirmed that, according to Bessent, Takaichi's policy has sent a positive message to the markets.

Yen picks up as fears about Japan's public finances ease

These comments have calmed markets somewhat, providing some support to an ailing Ye, which has depreciated about 2% since Prime Minister Sanae Takaichi took charge, amid investors' concerns that their loose fiscal policy will add pressure to the already strained public finances.

The focus this week will shift to the monetary policy decisions by the Fed and the BoJ, due later this week. The US central bank is widely expected to cut rates by 25 basis points, bringing the Federal Funds rate to a range of 3.75% to 4%, as soft inflationary trends seen on Friday give the bank some leeway to lower borrowing costs, aiming to support a deteriorating labour market.

The Bank of Japan, on the other side, is likely to keep interest rates unchanged at a 0.5% rate and hint at a 25 basis points rate hike, probably in December. Failure to keep hopes of an upcoming rate hike alive is likely to disappoint investor and might send the Yen on a tailspin.