3 days Ago By Bloomberg News
(Bloomberg) — The yen weakened past the key level of 155 versus the dollar after the Bank of Japan kept interest rates steady. Japanese stock futures fell slightly. Japan’s currency slid as much as 0.
4% against the greenback to 155.44, a level last seen in November. That followed a 0.
9% slide in the yen on Wednesday after the Federal Reserve cut interest rates while signaling caution over future rate reductions. Nikkei 225 futures were down 0.9% as of 12:12 p.
m. local time. The 155 level for the dollar-yen pair is closely watched by strategists, who see a slide to this mark as a potential trigger for verbal intervention from Japanese authorities, and added pressure on the BOJ to hike rates.
“The Fed’s hawkish tilt and BOJ’s pause could bring fresh reasons for yen traders to ‘carry’ on,” said Charu Chanana, chief investment strategist at Saxo Markets. The decision to stand pat was largely priced in by overnight index swaps prior to the meeting and predicted by the majority of economists in a Bloomberg survey. Rate hike bets had receded in recent weeks, contributing to a six-day losing streak in the yen through Monday, its longest stretch of declines versus the dollar since June.
BOJ officials saw little cost in waiting before raising interest rates, Bloomberg reported earlier this month, citing people familiar with the matter. A key focus for yen watchers will be whether BOJ Governor Kazuo Ueda gives any hints about the next rate hike at his news conference later Thursday. The central bank may face increased pressure to raise rates if the yen’s slump continues.
“There is an expectation that he will provide stronger hints of a January hike,” said Alvin Tan, head of Asia FX strategy at Royal Bank of Canada in Singapore. “If he is totally uncommittal, then USD/JPY upside has more legs.” What Bloomberg’s Markets Live Says.
.. “The yen’s fate is out of the hands of the Bank of Japan, for now.
The currency faces more of 2024’s weakness and whiplash — a multi-decade low of 160/USD and a one-year high — until policymakers deliver a bolder signal that policy normalization will resume.” Mary Nicola, Markets Live strategist at Bloomberg. Click here to read the full report.
Of note to traders, the BOJ said that the currency is more likely to affect prices than before. And board member Naoki Tamura voted against the stand-pat decision, proposing a rate hike to 0.5% at this gathering.
Currency strategists have pointed to the risk of further vulnerability for the yen ahead if the BOJ decides to keep interest rates unchanged until March or later. —With assistance from Winnie Hsu and Marcus Wong. (Updates with chart and quotes).
