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Yen skids to two-week trough after Ueda's remarks
AI Summary
- Japanese yen falls to two-week low against US dollar after Bank of Japan Governor Kazuo Ueda's less hawkish comments
- Dollar index rises by 0.2% to hit two-week high of 97.81 points, reflecting continued strength of US currency
- Market pricing for a 25-basis-point hike at October Bank of Japan meeting falls below 50% after Ueda's remarks, investors await further data on inflation, unemployment, and wages in Japan
The Japanese yen fell in Asian markets on Monday at the start of the week’s trading against a basket of major and minor currencies, recording its lowest level in two weeks against the US dollar, with the continued rise of the American currency in the foreign exchange market.
The decline also came after less hawkish comments from Bank of Japan Governor Kazuo Ueda, which reduced the likelihood of a rate hike in October, as investors await further evidence on the path of monetary policy normalization in the world’s fourth-largest economy.
Price Overview
• Today’s yen exchange rate: The dollar rose against the yen by 0.3% to ¥148.38, its highest since September 8, from an opening level of ¥147.94, with a low of ¥147.84.
• The yen ended Friday’s session slightly higher by less than 0.1% against the dollar, its first gain in three days, after the Bank of Japan meeting results were released.
US Dollar
The dollar index rose by about 0.2% on Monday, extending its gains for the fourth consecutive session, hitting a two-week high of 97.81 points, reflecting continued strength of the US currency against a basket of global currencies.
This rise came as traders reassessed near-term expectations after the Federal Reserve cut interest rates last week but signaled that further monetary easing would proceed only gradually.
Around 10 Federal Reserve officials, including Chairman Jerome Powell, are scheduled to speak this week, with investors closely watching their views on the economy and the independence of the US central bank.
Kazuo Ueda
Governor Ueda said on Friday: “We must pay attention to the impact of trade policies on financial markets, foreign exchange markets, as well as on Japan’s economy and prices.”
He added that the Bank of Japan will continue to raise interest rates if the economy and prices move in line with expectations, depending on improvements in economic and price conditions.
Commenting on the opposition of board members Hajime Takata and Naoki Tamura, who preferred a rate hike, Ueda said: the board did not agree on the proposal put forward by Takata and Tamura.
On the Federal Reserve’s decision, Ueda said: “The Fed’s rate cut will support the US economy, while there is no change in the outlook for the global economy.”
Japanese Interest Rates
• Following Ueda’s comments, market pricing for a 25-basis-point hike at the October Bank of Japan meeting fell from 75% to below 50%.
• To reprice those odds, investors are awaiting further data on inflation, unemployment, and wages in Japan.
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