Yen Extends Decline After Ueda’s Comments
The yen extended its decline past 156 per dollar for the first time in about a month after the Bank of Japan Governor Kazuo Ueda said he needs to watch next spring wage negotiations to decide on policy.
USD/JPY rose 1.1% to 156.49, extending Wednesday’s 0.9% climb after the Federal Reserve’s hawkish cut.
The BOJ kept its monetary policy settings steady, leaving its benchmark rate at around 0.25% and signaled it sees little urgency to raise rates for now. One board member dissented and proposed a rate hike to 0.5%.
Ueda reiterated the bank will continue to hike if its forecasts are realized, though cautioned it’s in no rush given the uncertainty over US policy and lack of information on wages, said Elias Haddad, a strategist at Brown Brothers Harriman in London. “160 is up next for USD/JPY,” he said. “Japanese officials will likely ramp-up currency jawboning as we approach intervention zone around 160.00”.
The Bloomberg Dollar Spot Index rose to the highest since Nov. 2022. Yield on 2-year Treasuries fell two basis points to 4.33%, paring Wednesday’s 11 basis-point climb.
The Fed signaled two cuts but “the overly hawkish tone of the meeting has seen the market dial back even less,” said Kerry Craig, a global market strategist at JPMorgan Asset Management in Melbourne.
“The Fed’s kind of opened the door to saying ‘maybe we won’t do any, that could be it,’ so you end up with this higher for longer narrative now, which is troubling. It’s good for the US but it’s challenging for the rest of the world”
NZD/USD up 0.3% to 0.5641, erasing an earlier decline.
Kiwi had fallen as much as 0.3% earlier after 3Q GDP data showed the economy is in a deeper-than-expected recession due to high interest rates.
GBP/USD gained 0.3% to 1.2608.
Majority of economists expect the Bank of England to keep its policy rate unchanged at 4.75%, according to a Bloomberg survey.
EUR/USD rose 0.4% to 1.0399.
