Japanese Yen outperforms as BoJ’s Ueda keeps door open for interest rate hikes

The Japanese Yen outperforms across the board, following BoJ Ueda’s press conference.
BoJ’s Ueda keeps the door open for interest rate hikes.
The Fed is unlikely to cut interest rates unless inflation starts progressing towards 2% target.

Sagar Dua FXStreet

The Japanese Yen (JPY) outperforms its major currency pairs during the European trading session on Thursday. The USD/JPY pair trades 0.45% lower to near 159.00 as JPY strengthens after Bank of Japan (BoJ) Governor Kazuo Ueda signaled the option of interest rate hikes remains open in his press conference, following the monetary policy announcement, in which the central bank left interest rates unchanged at 0.75%, as expected.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.15%	-0.14%	-0.48%	0.03%	-0.17%	-0.20%	0.30%
EUR	0.15%		0.00%	-0.35%	0.18%	-0.02%	-0.05%	0.45%
GBP	0.14%	-0.00%		-0.36%	0.18%	-0.03%	-0.05%	0.44%
JPY	0.48%	0.35%	0.36%		0.50%	0.29%	0.24%	0.79%
CAD	-0.03%	-0.18%	-0.18%	-0.50%		-0.19%	-0.24%	0.26%
AUD	0.17%	0.02%	0.03%	-0.29%	0.19%		-0.04%	0.46%
NZD	0.20%	0.05%	0.05%	-0.24%	0.24%	0.04%		0.50%
CHF	-0.30%	-0.45%	-0.44%	-0.79%	-0.26%	-0.46%	-0.50%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

“A rate hike is still possible if economic downturn proves to be temporary, doesn't affect underlying inflation,” BoJ’s Ueda said.

The likely economic downturn stated by Ueda is a reference to Middle East conflicts, which have raised concerns over prices and the economic outlook.

In the policy meeting, BoJ Board member Hajime Takata dissented from the decision of holding interest rates steady and called for a rate hike to 1.0%. Takata backed a rate hike while arguing that prices have sustainably returned to the 2% target and inflation could accelerate further amid the Iran conflict.

Meanwhile, the US Dollar (USD) trades marginally lower after a strong upside move on Wednesday. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 100.15, but is still close to its over nine-month high of 100.54 posted last week.

The US Dollar gained the previous day after the Federal Reserve’s (Fed) monetary policy outcome, in which the central bank signaled that interest rates will remain steady as progress in inflation has stalled.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

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BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.