Yen price weakens as BOJ Governor Ueda keeps markets guessing
Ueda signals shift in monetary policy amidst economic uncertainties
The dollar has been strengthening against the yen on Monday, rising 0.4% from 153.900 to 155.100. This change in momentum came along with comments from Bank of Japan (BOJ) Governor Kazuo Ueda, who left the door open for a potential rate hike but avoided confirming the timing.
In his first public remarks since the US election, Ueda highlighted steady progress in achieving wage-driven inflation, suggesting the BOJ is leaning toward reducing its ultra-loose monetary policy. Ueda emphasized domestic progress, such as rising wages and company price adjustments.
He also acknowledged uncertainties, including the economic outlook in the United States. Ueda warned that keeping borrowing costs too low for too long might push inflation beyond expectations. Despite this, he reiterated that decisions would hinge on economic data available at each meeting, leaving the markets divided on the likelihood of a December rate increase.
Market sentiment now shows a 54% probability of a quarter-point hike at the BOJ’s December 18-19 meeting, unchanged from prior estimates.
Dollar rally adds pressure to the Yen
The dollar’s rally against the yen aligns with a broader trend fueled by rising U.S. Treasury yields. Over the past six weeks, 10-year yields have climbed over 80 basis points, contributing to a 5.4% gain in the U.S. dollar index. The index currently sits at 106.500 above last week’s high at 106.200 while USD/JPY near 155.00.
Until Ueda’s upcoming conference and the December BOJ meeting, USD/JPY will continue to eye the potential retest of recent highs due to the US dollar momentum showing no signs of slowing.
The Yen bounced back against the US dollar on Friday. USD/JPY rebounds after Japan Q3 GDP growth beats forecasts
