- The Japanese Yen (JPY) fell to its lowest level since February
- BoJ Ueda prepared to wait to hike rates
- The US Dollar (USD) rises versus major peers
- Fed cut rates but with a hawkish tone
The US dollar Japanese yen (USD/JPY) exchange rate is rising to an 8-month high. The pair rose 0.4% in the previous session, settling on Wednesday at 152.73. On Thursday at 21.30 UTC, USD/JPY trades 0.90% at 154.11 and traded in a range of 152.17 to 154.45.
The yen is falling after the Bank of Japan left interest rates unchanged but adopted a more dovish tone in line with expectations.
The BoJ left rates at 0.5% but Governor Ueda was much more dovish than the market had anticipated. Ueda said the central bank was not at risk of falling behind the curve and that he would like to see more wage data under the new tariff regime to better understand inflation risks.
These comments suggest that he is willing to wait for the spring wage-negotiation rounds before deciding to hike interest rates again. The market had been expecting the BoJ to consider hiking rates as soon as December.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.3% at 99.52, marking the second day of gains.
The USD is rising after the Federal Reserve’s hawkish rate cut amid optimism over easing US-China trade tensions.
The Fed cut rates by 25 basis points as expected; however, Federal Reserve chair Jerome Powell was more hawkish in his comments, raising questions about whether the Fed will cut rates again in December.
As a result, the market lowered December rate-cut expectations from 90% going into the meeting to just 70% after the meeting.
The dollar was also being helped by news of a positive meeting between U.S. President Trump and Chinese President Xi Jinping. Trump agreed to lower the tariffs on China imports to 47%, down 10%, in return for China, but to keep rare earth exports flowing, tackle the fentanyl crisis, and purchase soybeans.
While the talks stopped short of a trade deal, they marked a further de-escalation, helping the USD.