During Friday’s Asian session, the USD/JPY pair surged to nearly 155.90 as the Japanese Yen (JPY) faced renewed downward pressure. This resurgence was triggered by the Bank of Japan (BoJ) maintaining its bond-buying levels from the previous operation, abstaining from a surprise reduction in debt purchasing earlier in the week.
Market speculation is rife that the BoJ could potentially decrease bond buying at the June policy meeting. BoJ Governor Kazuo Ueda also indicated that there are presently no immediate plans to offload the central bank’s ETF holdings.
In an interview with Bloomberg, former BOJ chief economist Toshitaka Sekine floated the notion that the Bank of Japan might increase its benchmark interest rate up to three times within the year. Sekine suggested that the next policy adjustment could potentially materialize as soon as June, highlighting the considerable leeway available to recalibrate the current “excessively” accommodative settings.
Meanwhile, the US Dollar Index (DXY), a measure of the USD’s performance against a basket of major currencies, hovers around 104.60 following a rebound from Thursday’s multi-week low of 104.08. The Federal Reserve (Fed) maintains a cautious stance regarding inflation and the prospect of rate cuts in 2024.
According to Reuters, Atlanta Fed President Raphael Bostic, speaking at an event in Jacksonville on Thursday, emphasized the necessity for patience with interest rates, citing persistent pricing pressures in the US economy. Furthermore, Cleveland Fed President Loretta Mester opined that it might take longer than initially anticipated to confidently discern the trajectory of inflation, advocating for the Fed to uphold its restrained stance for an extended duration.
