On Monday, the Dollar Rises vs Yen, continuing its recent upward movement following indications from Japan’s central bank of potential tightening of monetary policy, although the timing of any rate hike remains unclear.
Bank of Japan Governor Kazuo Ueda stated that the economy was moving towards consistent inflation driven by wages and cautioned against maintaining low borrowing costs. He also mentioned the possibility of a potential interest rate hike as soon as next month, in his initial remarks on monetary policy following Donald Trump’s win in the U.S. presidential election a fortnight ago.
However, Ueda did not provide any indication as to whether a rate increase would occur in December, citing multiple “uncertainties” that required further evaluation.
According to Marc Chandler, the chief market strategist at Bannockburn Global Forex in New York, the governor of the Bank of Japan did not provide any new signals.
“Due to the disruptions in July, the market expects BoJ to better inform about upcoming actions. However, the Bank of Japan governor failed to do so today, leading to a weakening yen.”
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The dollar rose by 0.43% to 155 against the Japanese yen. The US dollar ended a winning streak against the Japanese yen as Japanese Finance Minister Katsunobu Kato cautioned that steps would be taken to address extreme currency fluctuations.
The market indicated a likelihood of around 54% for a 0.25% increase at the upcoming Dec. 19 policy meeting, with minimal change following the speech.
