Yen Slips Following BOJ Comments
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Ueda Speaks on Japanese Economy
The Japanese Yen remains soft today with USDJPY in the green again on Tuesday. In comments this morning, BOJ governor Ueda said that the bank feels the Japanese economy is continuing to recover, albeit at a modest pace. Ueda cited better business sentiment for last month as showed in recent tankan survey data. The BOJ chief explained that underlying inflation is approaching 2% with the economy and general price moving in line with the bank’s forecasts. Ueda also shared his view that financial conditions remain accommodative, even after the September bank hike and signalled that the bank would carry out any further interest rate increases in line with economic, price and financial developments.
Risk Recovery Weighs on JPY
Price action in JPY recently suggests that the market is now less hawkish on the BOJ than it was prior to the September meeting. Two voters dissenting and voting against the hike as well as less hawkish messaging form Ueda has seen traders scaling back their BOJ tightening expectations. Additionally, the rally in risk assets this week amidst the weakening we’re seeing in energy prices is also putting pressure on JPY, keeping the USDJPY outlook skewed higher for now.
Technical Views
USDJPY
The pair is once again attempting to move above the bear trend line from YTD highs and the 157.95 level. If bulls can sustain a breach here, focus will turn to the 160.38 level next in line with bullish momentum studies readings. To the downside, 155.36 is the next keys support level to monitor.
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