Pairs pegged to the Japanese yen saw a spike in volatility today due to the BoJ's announcement, which at the outset badly dismayed the market. As reported by Bloomberg, some BoJ bankers are said to be against an interest rate hike at the December 19 meeting, which triggered a brief wave of appreciation for the Japanese currency.
The moves were quickly reversed, however, when another commentary suggested that the same bankers share a small waiting cost before raising interest rates. This is because they see less risk that a weak yen will cause inflation to rise.
The final form of the comments, which circulated through the market, caused the swap market's valuation of the chances of a rate hike to fall to just 18% for a December decision. Source: Bloomberg Financial LP
The USDJPY pair broke above the 152.00 barrier for the first time since November 27. Source: xStation
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Daily Summary: Shutdown ends, rate cut fades and risk is off