The USD/JPY pair has softened to around 151.95 during the Asian trading hours on Friday, with the Japanese Yen (JPY) gaining some traction following remarks from Bank of Japan (BoJ) Governor Kazuo Ueda. His comments were interpreted as increasing the likelihood of a rate hike in December, which has contributed to the Yen’s strength.
At its recent two-day meeting, the BoJ decided to maintain short-term interest rates at 0.25%, reaffirming its commitment to its inflation target. Governor Ueda indicated a cautiously optimistic outlook, stating, “Looking at domestic data, wages and prices are moving in line with our forecasts. As for downside risks to the US and overseas economies, we’re seeing clouds clear a bit.” These less dovish remarks suggest a shift in the BoJ’s stance that could support the JPY in the near term.
Traders are now focused on the upcoming US October Nonfarm Payrolls (NFP) report, which is expected to be a key market mover. Analysts anticipate that the US economy added around 113,000 jobs in October, with the Unemployment Rate forecasted to remain steady at 4.1%. Should the NFP data come in weaker than expected, it could lead to increased dovish sentiment regarding the Federal Reserve’s interest rate policy, potentially exerting further selling pressure on the US Dollar (USD).
As the market digests these economic indicators, the USD/JPY pair is likely to remain sensitive to both the US labor data and any additional commentary from BoJ officials regarding future monetary policy direction. The interplay between these factors could lead to increased volatility in the currency pair as traders adjust their positions ahead of the NFP release.
Related Topics:
- What is the Policy Rate of BOJ?
- What is the BoJ Report?
- How Much of the Bond Market Does the BOJ Own?
