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).

GBP/USD: Downward-sloping trendline near 1.3470 remains key barrier

The British pound faces selling pressure against its major currency peers, trading 0.1% lower at around 1.3420 against the US Dollar during the European trading session on Tuesday.

EUR/USD flatlines above 1.1500, awaits US jobs data

EUR/USD holds steady around 1.1505 in European trading hours on Tuesday. Markets remain cautious ahead of a slew of US jobs data, starting with the JOLTS Job Openings Survey later today. However, the downside appears capped by hot Eurozone inflation in July, bolstering the case for a European Central Bank rate hike at the next meeting.

Gold holds steady above $4,050; hawkish Fed bets favor bearish traders

Gold remains confined in a range below the $4,100 mark through the early European session as traders opt to wait for further developments surrounding the Middle East crisis. Meanwhile, the uncertainty over US-Iran peace talks continues to act as a tailwind for the safe-haven US Dollar.

Aave: Bearish RSI divergence risks a 20% drop despite steady DeFi deposits

Aave (AAVE) extends a mild near-term recovery on Tuesday, holding above its 50-day Exponential Moving Average at $90.80. Aave protocol’s V3 deployment on Monad blockchain recorded over $500 million in deposits over the last month, reflecting increased user adoption.

US JOLTs report in focus

In the US, the June JOLTs report will be in the spotlight. Job openings have increased modestly this year, which has historically predicted rising wage cost pressures ahead. June trade balance data will also be released in the afternoon and the preliminary reading pointed towards a stable trade deficit from May. The Fed's Schmid (non-voter, hawk) will be on the wires overnight.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.