USD/JPY Gains Ground as BoJ Signals Data-Driven Rate Decisions

10/31/2024

1 minute read

2024.10.31 10:54

The surged on Thursday after showing little movement this week. In the European session, USD/JPY is trading at 152.68 at the time of writing, down 0.48% on the day. Earlier, USD/JPY rose as high as 0.9% before retracting.

Bank of Japan Stays on the Sidelines

The didn’t have any surprises up its sleeve and held interest rates at 0.25% at today’s policy meeting. The BoJ released updated growth and inflation forecasts, but these didn’t provide any clues about rate moves as the forecasts had only minor revisions.

Governor Ueda said at a press conference that “inflation was moving in line with our forecasts” towards the 2% target, but added that he had no “preset idea” as to the timing of a rate hike. Ueda said that the central bank would make its rate decisions based on the data, which means that investors shouldn’t expect any broad signals from the BoJ about its rate path.

Ueda made reference to the currency markets and that has sent the yen flying higher. Ueda stated that the currency markets have had a strong impact on Japan’s economy. The markets took this as a possible indication that a rate hike will be sooner rather than later, although the BoJ is likely to wait until early 2025 before raising interest rates.

The BoJ has intervened in the currency markets when the yen depreciated quickly and another intervention could be in the works, as the yen has had a miserable October, falling 6.3%.

The political uncertainty is not helping the wobbly yen. Japan’s general election left the ruling Liberal Democratic Party without a majority and it’s unclear if Prime Minister Ishiba will be able to cobble together a government. USD/JPY-4-Hour Chart