Tue, Jun 18, 2024

BOJ’s Ueda: Yen Weakens Amid Wage Hike Anticipation
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JPY: BoJ’s Ueda: Household sentiment up on wage hike expectations

The Bank of Japan Governor Ueda said House hold sentiment is going to improve on the expectations of wage hikes in the economy, we have to maintain accommodative policy for time period, when the Wage-inflation cycle turned positive we gradually cut the Bond buying operations and do rate hikes, it is purely based on Wages increases with price increase inflation in the Japan economy we expected. FX Levels is more impacted on the economy, prices, and business in the Japan.

USDJPY is moving in box pattern and market has rebounded from the support area of the pattern

USDJPY is moving in box pattern and market has rebounded from the support area of the pattern

BoJ Governor Ueda: Household sentiment improving with anticipated wage hikes.

Other statements:

– No comments on specific FX movements.

– Acknowledges FX movements’ substantial impact on economy and prices.

Japanese Economy

– Emphasizes close monitoring of FX effects on economy and prices, in collaboration with government.

– Recently expressed commitment to maintaining accommodative monetary policy, triggering significant Japanese Yen selling.

JPY: BOJ Governor Ueda advocates easy policy to support economy.

The Bank of Japan Governor Ueda said House hold sentiment is going to improve on the expectations of wage hikes in the economy, we have to maintain accommodative policy for time period, when the Wage-inflation cycle turned positive we gradually cut the Bond buying operations and do rate hikes, it is purely based on Wages increases with price increase inflation in the Japan economy we expected. FX Levels is more impacted on the economy, prices, and business in the Japan.

USDJPY is moving in Ascending Triangle and market has reached resistance area of the pattern

USDJPY is moving in Ascending Triangle and market has reached resistance area of the pattern

Bank of Japan Governor Kazuo Ueda emphasized the significance of maintaining accommodative monetary policy to bolster the economy during a session on Wednesday. Addressing parliament, Ueda highlighted that Japan’s medium- to long-term inflation expectations and trend inflation are steadily progressing towards the 2% target set by the Bank of Japan (BOJ). He expressed confidence in the likelihood of achieving the BOJ’s inflation target over the long term, citing the expected growth in average real wages, which are anticipated to become positive in the near future.

JPY: Yen hits 34-year low, sparks intervention talks

The Bank of Japan Governor Ueda said House hold sentiment is going to improve on the expectations of wage hikes in the economy, we have to maintain accommodative policy for time period, when the Wage-inflation cycle turned positive we gradually cut the Bond buying operations and do rate hikes, it is purely based on Wages increases with price increase inflation in the Japan economy we expected. FX Levels is more impacted on the economy, prices, and business in the Japan.

The yen experienced a significant drop to its lowest level against the U.S. dollar in 34 years on Wednesday, despite prior warnings from financial authorities about potential intervention to halt its decline. Despite the Bank of Japan (BOJ) implementing its first rate hike in 17 years the previous week, the yen’s weakness persisted, with the central bank emphasizing its intention to maintain a dovish stance for the foreseeable future.

BOJ policy board member Naoki Tamura reiterated during a speech in Aomori Prefecture on Wednesday that the accommodative financial conditions would persist, affirming the central bank’s commitment to gradually normalizing its monetary policy. However, Tamura’s remarks suggested that another rate hike was not imminent, leading to a momentary plunge of the yen to ¥151.97 against the dollar in Tokyo – its weakest level since July 1990.

Japan Bank of Japan Head Office Building in Tokyo

The significant movement in the dollar-yen rate prompted market analysts to anticipate potential intervention by financial authorities. Takahide Kiuchi, an executive economist at the Nomura Research Institute, highlighted the current level of the exchange rate as nearing the defensive line of financial authorities, suggesting that intervention could occur at any time.

Financial officials convened an emergency meeting later on Wednesday to assess the currency’s movement. Masato Kanda, Japan’s top currency diplomat at the Finance Ministry, characterized the recent fluctuations in the dollar-yen rate as speculative rather than reflective of economic fundamentals. He emphasized that the authorities were prepared to take decisive measures against excessive currency movements.

Finance Minister Shunichi Suzuki echoed similar sentiments, stating that all options would be considered to address excessive currency movements. BOJ Governor Kazuo Ueda refrained from commenting directly on the dollar-yen trend but assured that the situation would be closely monitored.

The BOJ’s decision to abandon its negative rate policy and implement a rate hike last week aimed to align its monetary policy with the robust pay increases observed during spring wage negotiations. However, the yen’s decline persisted even after the rate hike announcement, suggesting that further factors were at play.

Market observers anticipate a potential shift in the currency landscape in the coming months, with the U.S. Federal Reserve signaling potential rate cuts while the BOJ may consider further rate hikes later in the year. Despite these expectations, the yen is projected to remain relatively weak overall.

USDJPY is moving in Ascending Triangle and market has reached resistance area of the pattern.

USDJPY is moving in Ascending Triangle and market has reached resistance area of the pattern.

UBS SuMi Trust Wealth Management provided forecasts indicating a weaker yen against the dollar in the coming months. However, the BOJ has not provided definitive signals regarding the timing of additional rate hikes, although speculation remains high that further adjustments may occur later this year, contingent on inflation trends and economic developments aligning with the central bank’s objectives.


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