USD/JPY pulls back after briefly breaching 145.00 as BOJ reaffirms caution – Société Générale

FXStreet Insights Team FXStreet

USD/JPY briefly breached the psychologically significant 145.00 level before pulling back, as dovish remarks from BOJ Governor Ueda reinforced market expectations for a slow and cautious policy normalization. Despite some inflation gauges exceeding BOJ projections, underlying inflation remains subdued, limiting the urgency for rate hikes, Société Générale's FX analysts note.

BOJ’s Ueda sees no rush to tighten

"USD/JPY edged up briefly above 145.00 before retracing part of its gains. Bank of Japan (BOJ) Governor Kazuo Ueda signaled there was no rush for the bank to resume tightening policy because underlying inflation remains below 2%. Ueda is referring to CPI (all items less food and energy) which has remained more or less flat, between 1.5% y/y and 1.6% y/y this year (chart below)."

"In contrast, CPI (all items less fresh food and energy) increased to 3% y/y in April and is tracking above the BOJ’s 2025 forecast of 2.3%. Regardless, the swaps market still implies only 50bps of BOJ rate hikes over the next two years and the policy rate to peak at 1.00%. The BOJ’s cautious normalization cycle is an ongoing headwind for JPY."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.