Yen Weakens as Markets Await BoJ Governor Ueda’s Speech
The Japanese yen continued its decline against major currencies in Asian trading on Tuesday, marking its second straight day of losses. Investors are increasingly favoring the US dollar, seen as a top choice in the foreign exchange market, putting pressure on the yen. This trend follows divisions within the Bank of Japan (BoJ) over the pace of monetary policy normalization, which has lowered expectations for a Japanese interest rate hike in October. Markets are now focused on a speech by BoJ Governor Kazuo Ueda later today for further clarity.
The USDJPY pair rose around 0.2% to ¥158.17, up from an opening level of ¥157.89. The yen had already ended Monday down less than 0.1% against the dollar, marking its third loss in four sessions, partly due to weak data from Japan’s services sector.
The US Dollar Index also gained 0.1% on Tuesday, extending its gains for a second session and nearing an 18-month high of 102.54. This strength in the dollar is supported by expectations of a US interest rate hike in December and rising political risks in Europe and the Middle East, which are boosting demand for the dollar as a safe haven. The 10-year US Treasury yield rose 0.3%, approaching Monday’s 24-year high of 5.349%, further supporting the dollar.
Markets are awaiting the minutes of the Federal Reserve’s latest meeting on Wednesday for insights into US monetary policy. Meanwhile, the BoJ’s September meeting revealed divisions among policymakers over the pace of monetary tightening, with markets currently pricing in a 35% probability of a 25 basis point interest rate hike in October. Investors are also watching for further data on inflation, unemployment, and wages in Japan to reassess these expectations.
BoJ Governor Kazuo Ueda is scheduled to speak at the National Securities Conference in Tokyo at 06:35 GMT. His remarks are expected to provide important clues about the path of monetary policy normalization and the outlook for Japanese interest rates. If Ueda’s comments are less hawkish than anticipated, expectations for a rate hike in October could decline, potentially putting further downward pressure on the yen against the US dollar.