USD/JPY drifts higher above 154.50 as BoJ rate hike expectations fade

• USD/JPY edges higher to around 154.75 in Thursday's early Asian session. 
• The US government shutdown affects economic data releases. 
• Diminishing odds for a December BoJ rate hike weigh on the Japanese Yen. 

The USD/JPY pair attracts some buyers near 154.75, the highest since February, during the early Asian session on Thursday. The Japanese Yen (JPY) weakens against the US Dollar (USD) amid a risk-on mood ahead of an expected vote to refund the US government on a short-term basis and diminishing odds for December Bank of Japan (BoJ) rate hike. Traders will take more cues from the Fedspeak later on Thursday. 

Reuters reported that the US House of Representatives will try to end a record US government shutdown on Wednesday, with a vote on a stopgap funding package to restart disrupted food assistance, pay hundreds of thousands of federal workers, and revive a hobbled air-traffic control system. The bill will restore funding to government agencies through January 30. Hopes for the end of the US government shutdown could provide some support to the Greenback against the JPY in the near term.

White House Press Secretary Karoline Leavitt said on Wednesday that October jobs and inflation data reports are unlikely to be released as a consequence of the government shutdown. This leaves policymakers without key data to assess the health of the US economy.

Concerns that the new Japanese government will seek to influence the country's central bank into delaying rate hikes could weigh on the JPY and create a tailwind for the pair. Japan's Prime Minister Sanae Takaichi on Wednesday underscored her preference for keeping interest rates low to support a fragile recovery. Takaichi noted that inflation driven by food prices could hurt the economy, and the government will work closely with the BoJ to ensure Japan sees inflation driven by wages.

On the other hand, expectations that Japanese authorities might intervene to stem further weakness in the domestic currency could underpin the JPY. Japan's Finance Minister Satsuki Katayama said on Wednesday that she recently saw one-sided and rapid moves in the currency, adding that she will closely watch FX moves with a high sense of urgency.