Yen Plummets After BOJ, Volatility Selloff Extends
The yen fell against all its Group-of-10 peers after Bank of Japan Governor Kazuo Ueda indicated the central bank will be cautious about further interest-rate hikes after raising its benchmark on Friday.
USD/JPY rallies by 1% to 157.13, heading for its biggest daily gain in a month, as it hits its highest level since Nov. 24.
BOJ lifted its key rate by a quarter point to 0.75%, the highest since 1995; the central bank retains room to raise rates further, but how high or how fast should be determined carefully by examining price and economic developments, Ueda said in a press conference following the decision.
Ueda pointed out that the policy rate is still some distance from the lower end of the central bank’s neutral rate range of 1%-to-2.5%.
As central bank risks are priced out, hedging price swings in the major currencies keep getting cheaper into year-end — but the softness is not just a holiday quirk.
The market is carrying that calm well into January, as the policy paths of the big central banks look clearly defined, so the near term distribution feels narrow.
Bloomberg’s dollar index rises 0.2%, up a third day; New York Fed President John Williams speaks later Friday.
EUR/USD drops a fourth day, down 0.1% to 1.1710; GBP/USD little changed at 1.3377.
Source : Bloomberg
