Yen Strengthens, Is the BoJ Ready to Accelerate?
The Japanese yen (JPY) maintained its intraday gains throughout the early European session on Monday and has the potential to strengthen further. The market is increasingly confident that the Bank of Japan (BoJ) will adopt a more hawkish stance following a change in tone from Governor Kazuo Ueda and improving business confidence data, which are seen as supporting the possibility of an interest rate hike in the near future. At the same time, slightly weaker global risk sentiment has boosted interest in the yen as a safe-haven asset.
This support is strong enough to offset concerns about Japan's deteriorating fiscal condition due to Prime Minister Sanae Takaichi's large spending plans. Meanwhile, the US dollar (USD) is actually depressed near a two-month low as markets bet the Fed could cut interest rates two more times. The contrast between the aggressive BoJ and the increasingly dovish Fed makes the yen's short-term outlook appear more positive, even though Japanese yields remain relatively low. (az)
Source: Newsmaker.id
