Japanese yen was further weakened by dovish words from the Bank of Japan on Thursday.
The Japanese yen (JPY) is expected to oscillate in a narrow range against its American counterpart throughout the Asian session on Friday. Consolidating the previous day’s significant losses to a new YTD low. Shinichi Uchida, Deputy Governor of the Bank of Japan (BoJ), stated on Thursday. That significant tightening is unlikely even when the country exits negative interest rate policy.
This, combined with the recent positive run in the equity markets, continues. To support the safe haven JPY. The US Dollar (USD), on the other hand, is trading at its best level in over three months. Which was reached earlier this week. And appears to be another element acting as a tailwind for the USDJPY pair.
The Fed rate cut uncertainty keeps USD bulls on the defensive, limiting gains.
However, the uncertainty surrounding the Federal Reserve’s (Fed) rate drop path is preventing USD bulls from making aggressive wagers.
Traders also prefer to wait for US consumer inflation numbers, which are due next week.
Furthermore, predictions that large Japanese enterprises will give significant salary increases. This year will support persistent and steady inflation. Allowing the BoJ to shift away from its ultra-dovish monetary policy settings and limiting losses for the JPY. Traders may also choose to wait for next week’s release of the latest US consumer inflation numbers. For indications on the Fed’s Future policy actions will have a significant impact on the near term USD price dynamics. And the next leg of a directional move for the USDJPY pair.
Daily Digest Market Movers: Japanese Yen under pressure following Uchida’s dovish remarks.
In response to Bank of Japan Deputy Governor Shinichi Uchida’s dovish statements. The Japanese yen saw aggressive selling on Thursday. Falling to a new YTD low against the US dollar.
In a press statement. Uchida indicated a gradual shift away from the current negative interest rate environment stating. That the BoJ does not intend to make any radical actions in the near future.
Yoshimasa Hayashi, Chief Cabinet Secretary, stated on Friday. That it is up to the BoJ to decide monetary policy. The details and Uchida’s statements were identical to those made by Governor Ueda. During the previous meeting.
Japanese Finance Minister Shunichi Suzuki stated that the BoJ is responsible for determining particular monetary policy and that currencies must move steadily in accordance with fundamentals.
Robust US macro data, combined with recent hawkish comments from numerous Federal Reserve officials, prompted investors to lower their expectations for early and substantial interest rate decreases this year.
Richmond Fed Thomas Barkin stated on Thursday that the central bank has time to be patient with rate increases and that he needs to see favorable inflation statistics sustained and expanded.
Barkin noted that the labor market is dynamic, and it is difficult to judge the most appropriate course of action for rates based only on economic models.
The yield on the benchmark 10-year US government bond is safely over 4.0%, but it does nothing to impress US Dollar bulls or provide considerable support for the USDJPY pair.
Traders currently appear hesitant to make bold wagers. Preferring to wait for the release of next week’s US consumer inflation numbers. For further clues about the Fed’s future policy decision.
