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Japanese Yen Lower After BoJ Minutes

The Japanese yen has posted a three-day slide and is in negative territory on Thursday. USD/JPY has risen 0.26% on the day and is trading at 155.93 at the time of writing.

Is the BoJ turning hawkish?

The Bank of Japan released its Summary of Opinions from its April 26th meeting earlier today. The meeting was uneventful as the BoJ maintained policy settings. The yen proceeded to slide and just a few days later broke below the 160 line, triggering a suspected intervention by Japan’s Ministry of Finance. Governor Ueda was criticized for failing to send a clear message at the meeting about further rate hikes, which may have boosted the ailing yen.

Ueda may have tried to rectify matters by stating on Wednesday that he was ready to tighten policy if inflation was higher than expected. The BoJ Summary of Opinions showed that many members called for the central bank to continue raising rates in order to reduce risks of inflation rising more than expected.

Will the hawkish BOJ Summary of Opinions push Ueda into action? That remains to be seen, as inflation will have to move higher before the BoJ tightens again. The Japanese economy remains fragile and a significant rate hike could risk tipping the economy into a recession.

The BoJ took the plunge in March and lifted rates into positive territory. Still, rates remain close to zero and the yen will remain under pressure as the US/Japan rate differential remains wide. The BoJ is showing signs of becoming more hawkish, such as the Summary of Opinions, but the path to normalization remains long.

USD/JPY Technical

  • USD/JPY continues to rise is testing resistance at 155.96. Above, there is resistance at 156.42
  • There is support at 155.22 and 154.76

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