However, the Bank of Japan must also grapple with the effects of a weaker Japanese Yen on the economy. A weaker Japanese Yen leads to higher import costs, impacting household spending. The Bank of Japan expects recent wage increases to fuel household spending and demand-driven inflation. Higher import costs would offset the effects of wage growth.

Trade data for March signaled a weakening demand environment, with imports falling by 4.9% year-on-year.

US Economic Calendar: Fed Speakers in Focus

On Friday, investors should monitor FOMC member commentary. Fed Chair Powell and FOMC members poured cold water on investor expectations of a June Fed rate cut.

US labor market conditions remain tight, with consumer spending continuing to drive the US economy.

Support for a more cautious approach to cutting interest rates could further shift investor bets on 2024 Fed rate cuts. FOMC member Austan Goolsbee is on the calendar to speak. The Chicago Fed President recently highlighted that the housing services sector is the biggest challenge to bringing inflation to the 2% target.

The CME FedWatch Tool reflects the effects of recent economic data and Fed speeches. According to the CME FedWatch Tool, the probability of a 25-basis point June rate cut fell from 20.1% (April 11) to 16.2% (April 18). Moreover, the chances of the Fed holding interest rates at 5.5% in September increased from 31.0% to 35.6% over the same period.