2 min to read
A robust trend of yen selling has emerged
shaping the London Forex Overview.
“Following Governor Ueda’s press conference, a robust trend of yen selling has emerged, shaping the London Forex Overview”
The outcome of today’s Bank of Japan monetary policy meeting aligns with market expectations, as the decision was made to maintain the prevailing policy interest rate and yield curve control (YCC). Despite anticipation, particularly among foreign investors, for an early cessation of negative interest rates, the statement retained its commitment to the existing accommodative stance. The pivotal phrase, “if necessary, additional monetary easing measures will be taken without hesitation,” was reaffirmed. Consequently, the USD/JPY pair exhibited an ascent from approximately 142.60 yen to the 143.70 yen range. Subsequently, it stabilized around the 143 yen level, setting the stage for Governor Ueda’s press conference at 3:30 pm, where it steadied at approximately 143.60 yen.
The press conference witnessed a momentary surge in yen purchases and dollar sales, briefly touching around 142.55 yen. This movement coincided with Governor Ueda communicating the contents of the statement at the outset of the press conference. Algorithm-driven dollar selling ensued following an English headline news announcement forecasting the Consumer Price Index to exceed 2% by the fiscal year 2025. This development led to substantial market fluctuations, considering the relatively subdued trading volume during the initial phase of the press conference. However, the news aligning with the statement content prompted a swift recovery to the 143 yen range.
During the Q&A session, Governor Ueda affirmed the continuation of the accommodative stance. Responding to inquiries about the phrase “more challenging from the end of the year to the next year,” which briefly prompted yen buying, he clarified that it pertained to his work-related attitude and did not specifically hint at the removal of negative interest rates.
The maintenance of the accommodative stance in both the meeting statement and the press conference, coupled with remarks related to challenging aspects, triggered a sudden and pronounced surge in yen selling. The USD/JPY pair surpassed its post-meeting high, reaching the 144 yen range, with the dollar further strengthening against the yen, nearing 144.90 yen and approaching the 145 yen level.
Anticipations for an early discontinuation of negative interest rates by the Bank of Japan diminished post-meeting, fostering a scenario where the adjustment to the preceding yen-buying trend gained momentum.
Cross-yen pairs echoed similar movements, with Euro-to-yen climbing from approximately 155.70 yen to 157.01 yen post-meeting. However, upon entering the press conference around the 157 yen mark, a transient appreciation of the yen occurred, bringing the pair down to around 155.80 yen. Subsequent yen selling propelled it beyond 158.50 yen. Other cross-yen pairs, including Pound-yen and Aussie Dollar-yen, demonstrated analogous movements.
Euro-to-dollar experienced relatively minor effects, with some resilience in euro purchases against the yen, falling short of reaching 1.0950.
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