BOJ Governor Ambiguous on Interest Rates amid Weakening Yen

Ahead of the Bank of Japan’s December meeting, Governor Kazuo Ueda refrained from signaling any clear intentions regarding interest rate changes. In his latest speech, Ueda emphasized that the central bank’s decisions remain closely tied to evolving economic conditions and inflation, leaving the door open for potential rate hikes. His relatively cautious stance led to a 0.5% decline in the yen, pushing it to 155.14 against the dollar, while bond yields also saw a slight dip as markets had expected a firmer tone.

Ueda stressed the importance of closely monitoring risks, particularly those linked to the US economy, while expressing optimism about a soft landing for the US, supported by recent positive data. He also noted that there is no immediate need for extensive deliberation before policy adjustments, given the reduced risks from the US economy.

The US dollar continued its bullish momentum, buoyed by strong Treasury yields and a more restrained outlook on US rate cuts, while the yen struggled amid concerns over the Bank of Japan’s stance. Yen bears were wary of any hints from Governor Ueda on a potential December rate hike due to the currency’s weakness. The dollar retreated slightly against the yen after Japanese officials warned of potential intervention if the yen depreciated too quickly.