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Yen slides as traders await Kazuo Ueda’s post-meeting comments
With Bank of Japan rates widely expected to stay unchanged, markets are weighing odds of a hike by September and October, and whether Ueda signals a path to tightening.
The Japanese yen remains under pressure ahead of Bank of Japan Governor Kazuo Ueda’s remarks after the central bank’s policy meeting on Friday, a moment traders say could determine whether the currency stabilizes or falls further. LiveMint Markets notes the yen has already dropped to its lowest level against the US dollar since 1986 in June and has continued weakening this month.
The yen’s slide is being linked to factors including higher oil prices, fiscal concerns, and wide interest rate differentials, even after authorities carried out a record intervention in the last quarter. While clearer signals from Ueda could help steady sentiment, market participants cautioned that a sharp yen rebound is unlikely.
Economists and strategists cited by LiveMint Markets said the outlook hinges on whether Ueda appears sufficiently hawkish. RBC Bluebay chief investment officer Mark Dowding said that if Ueda is not hawkish enough, the yen could keep weakening beyond 165 per dollar, though he expects Ueda would likely open the door to a hike at the September or October meeting.
The report also highlights debate within Japan’s policy process, including possible government constraints, and quantifies market expectations using overnight index swaps. It shows roughly a 29.0 percent chance of a rate hike by September and about a 78.0 percent chance by October, alongside concern that the BOJ needs stronger forward guidance to change the trajectory.