The bank of Japan (BoJ) agreed that a virtuous cycle between wages and prices has been met, enabling an historic moment for the accommodative central bank. Yen weaker
The Bank of Japan voted to raise the benchmark interest rate into the 0% - 0.1% range in a historic move that marks the end of the Bank’s negative interest rate policy which was implemented to combatthat plagued the nation for years. The move sees the policy rate up into positive territory after 8 years and marks the first
USD/JPY continued the move higher as the yen came under pressure in the moments following the BoJ announcement. Typically, a surprise rate hike lifts the local currency but the lack of forward guidance around subsequent rate hikes meant that interest rate differentials are likely to work against the yen in a low volatility environment – favouring a continuation of theis also helping the rally as markets now anticipate a July rate cut instead of June.
In the absence of a more hawkish BoJ and while fundamentals continue to support the dollar, USD/JPY may continue to rise further with 151.90 the next level of consideration. A positive carry trade, low volatility and markets delaying the start of rate cuts in the US continues to support the bullish move in the pair.
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