- The Japanese Yen (JPY) is falling after gains yesterday
- Hawkish BoJ comments & intervention risk
- The US Dollar (USD) rises against major peers
- Fed speakers highlight diverging views
The US dollar Japanese yen (USD/JPY) exchange rate is rising, recouping yesterday’s losses. The pair fell -0.29% in the previous session, settling on Monday at 156.39. On Tuesday at 18:00 UTC, USD/JPY trades +0.20% at 156.71 and traded in a range of 156.16 to 156.80.
The yen is falling on Tuesday, reversing yesterday’s gains. The yen rose at the start of the week on a mix of safe-haven flows and hawkish BoJ comments.
BoJ Governor Ueda reiterated the central bank’s hawkish bias on Monday, saying that the BoJ will keep raising rates in line with improvements in the economy and inflation.
Persistent yen weakness supports the case for further BoJ tightening while also reviving concerns over possible intervention. Japanese officials have issued repeated verbal warnings, highlighting their unease with sharp moves in the currency.
The US dollar is rising across the board. The US dollar index, which measures the USD against a basket of currencies, is up 0.26% to 98.53 after yesterday’s losses.
The USD is pushing higher after the impact of the shock US capture of Venezuelan president Nicolas Maduro at the weekend was short-lived across the currency markets, in the broader financial market.
Investors are also weighing up the commentary by Federal Reserve officials on the path forward for monetary policy this year. Richmond Fed President Tom Barkin insisted the Fed will need to be finely tuned to incoming data, given the risks to both unemployment and inflation.
Meanwhile, Stephan Miran said that the US central bank needs to cut rates aggressively this year to keep the economy moving forward.
Fed funds are pricing in around an 80% chance that rates will remain on hold at the January meeting.