- The Yen extends losses to fresh multi-week lows as the BoJ decision disappointed investors.
- Ueda cast doubts about a rate hike in the coming months and sent the Yen lower.
- Investors will be observing US PCE Inflation today for further clues on the Fed’s monetary policy.
The US Dollar keeps marching higher against a vulnerable Japanese Yen on Thursday as the Bank of Japan’s Governour, Kazuo Ueda, cooled hopes of immediate rate hikes, following the bank’s monetary policy decision.
The BoJ maintained its key interest rate at 0.5%, as widely expected, and Ueda reiterated the bank’s commitment to keep tightening its monetary policy but failed to give any further clues about the timing of the next rate hike.
The Yen weakens as BoJ Ueda’s comments fall to the dovish side
Ueda raised inflation projections but assessed that trade uncertainty remains elevated, despite the recent pact with the US, and called for patience to assess the economic impact of US tariffs.
The bank’s chief also affirmed that the Yen is not “deviating much from the BoJ’s view,” suggesting that the bank is comfortable with a weaker JPY and curbing hopes of an immediate rate hike further. The Japanese currency declined against its main peers after Ueda’s press release.
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The USD, on the other hand, remains buoyed by a combination of solid macroeconomic figures, heightened expectations that the Fed will keep interest rates higher for longer, and recent trade deals, which, according to the market reaction, have been more beneficial to the US than to its trading partners.
The focus today is on the US PCE Prices Index, the Fed’s inflation gauge of choice, which is expected to confirm that price pressures remain sticky above the 2% target, strengthening the case for the Fed’s hawkish stance.
