Japanese Yen bounced 1% on hawkish comments from BoJ’s Ueda

The beaten-down Japanese Yen bounced back on Monday morning, gaining over 1% to ¥146 per dollar following the hawkish comments from BoJ’s Governor Ueda and a weaker dollar ahead of this week’s U.S. CPI & PPI inflation readings.

USDJPY, 2-hour chart

Bank of Japan’s Governor Kazuo Ueda gave life to the Yen by fuelling hopes that Japan could soon signal a new era away from negative rates. During the weekend, Ueda said that the central bank could end its negative interest rate policy when the achievement of its 2% inflation target is in sight. https://bit.ly/3Pz3SIi

Yet, the recent bounce of the Yen against the U.S. dollar has only covered a tiny fraction of the steep losses that Yen has been suffering this year, mainly due to the BoJ-Fed monetary policy divergence on how to curb record-high inflation.

Federal Reserve together with the other major central banks ECB and BoE, applied an aggressive rate-hike cycle since 2022 to fight against persistent inflation, while the Bank of Japan maintained its dovish ultra-loose monetary policy with zero-negative rates to support the economy.

In this context, traders got net sellers on the Yen, tumbling to multi-month lows of ¥147, ¥160, and ¥186 against the U.S. dollar, Euro, and Pound Sterling respectively.

The ongoing weakness of the yen had forced Japan’s authorities (September 22, 2022) to intervene in the market to support the falling currency for the first time since 1998. https://bit.ly/3EwRn9I