The Japanese yen saw a modest rise of 0.2% to 154.40 per dollar after Bank of Japan Governor Kazuo Ueda reaffirmed his stance on interest rates. The yen has dropped about 7% since October, prompting speculation of government intervention. Meanwhile, the U.S. dollar retreated from recent highs, with the euro recovering slightly. Australia’s dollar fell as the Reserve Bank maintained rates, and traders are eyeing potential rate cuts in New Zealand next week.
Yen Sees Modest Recovery Amid Bank of Japan’s Stance
The Japanese yen experienced a slight increase of 0.2%, reaching 154.40 per dollar. This bounce back comes after a previous decline, as Bank of Japan Governor Kazuo Ueda maintained his consistent approach without hinting at a potential interest rate hike in December.
Rodrigo Catril, a senior currency strategist at National Australia Bank, commented, “The yen’s recent weakness had led many traders to anticipate a more optimistic outlook from Mr. Ueda. However, he ultimately delivered his usual rhetoric.” He further stated, “While we believe that current economic conditions and inflation pressures support a rate hike in December, any political setbacks could influence this decision, especially as the LDP aims to regain public favor following a disappointing performance in the recent lower house elections.”
Market Trends and Currency Movements
Since October, the yen has depreciated by approximately 7%, notably surpassing the 156 dollar threshold last week for the first time since July. This has prompted traders to remain vigilant for potential interventions by Japanese authorities to stabilize the currency.
On a broader scale, the dollar has been retreating, distancing itself from the one-year peak it reached last week against a range of currencies. The British pound found stability at 1.2676 dollars, while the dollar index edged up by 0.04% to 106.26 after a 0.4% decline overnight.
Jarrod Kerr, chief economist at Kiwibank, noted, “Profit-taking is common following significant market movements like this.” The U.S. dollar has gained over 2% since the start of the month, buoyed by diminished expectations surrounding the Federal Reserve’s interest rate cuts and the anticipation that policies promoted by elected President Donald Trump—such as tariffs, immigration reduction, and tax cuts financed by debt—could drive inflation in the U.S. economy.
The euro also bounced back from its one-year low reached last week, settling at 1.0590 dollars. Comments from two senior European Central Bank officials indicated a greater concern regarding the potential negative impact of new U.S. tariffs on eurozone economic growth than on inflation.
In other currency movements, the Australian dollar dipped by 0.15% to 0.6499 dollars. The minutes from the Reserve Bank of Australia’s November meeting revealed that policymakers do not see an immediate necessity to alter interest rates, having kept them unchanged for a year. However, they emphasized the importance of being prepared to adapt to changing economic forecasts.
Markets currently do not fully anticipate a rate cut before May of the following year, with only a 38% chance of a cut in February, following the fourth-quarter inflation report. Meanwhile, the Reserve Bank of New Zealand is expected to meet next week, with traders anticipating a 50 basis point reduction from the central bank. The kiwi dollar was last seen at 0.5880, down 0.24%.