The start of the new trading week got off to a relatively brisk start, driven by comments from BoJ Governor Ueda, who for the first time openly mentioned the possibility of implementing slightly more hawkish monetary measures, thus exiting the negative interest rate zone.
Bank of Japan Governor Ueda commented at the weekend that he was focusing on a "quiet exit" limiting monetary easing as long as the data the Bank will learn by the end of the year warrants such a move.
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Create account Try a demo Download mobile app Download mobile appUeda said he believes it is possible that the BOJ will have enough information by the end of 2023 to assess whether wages will continue to rise, a condition for limiting monetary stimulus.
In reaction to these comments shortly after the FX market opened, the USDJPY pair is under clear selling pressure, thus descending to the 146.16 zones (-0.43% on a daily basis). Japanese 10-year bond yields rose to the highest levels recorded since 2014.
In this regard, the dollar itself is also worth mentioning. This week, investors' attention will focus on inflation data from the US, which could be the final key element in defining whether the Fed will halt the interest rate hike cycle. US Treasury Secretary Janet Yellen has said she is confident of a soft landing for the US economy. Moreover, Nick Timiraos of the WSJ believes that the FED will not decide on a hike at the September meeting and will give more serious thought to whether one will still be needed.
The USDJPY pair is losing close to 0.5% during today's session and is down towards last week's lows. Other factors that could cause increased volatility on the pair are the ECB's interest rate decision (Thursday) and inflation data from the US (Wednesday). Source: xStation 5
