USD/JPY rises after BoJ says no rush to raise rates

The US dollar has posted gains on Tuesday. In the North American session, USD/JPY is trading at 144.04, up 0.34% at the time of writing.

BoJ’s Ueda says no rush to hike rates

The Bank of Japan stayed on the sidelines at last week’s rate meeting but the markets continue to anticipate a rate hike, as inflation has been moving higher. On Tuesday, BoJ Governor Ueda sounded dovish about future rate hikes, saying that the central bank could afford to stay on the sidelines and monitor financial markets and the global economy before making any decisions.

The BoJ will be keeping a close eye on domestic data and Ueda singled out October service inflation releases as being a key factor in determining if underlying inflation was rising towards to 2% target, a prerequisite for raising rates. This data won’t be released until November, which would appear to signal that the BoJ won’t raise rates until December at the earliest. The next BoJ meeting is on Oct. 31.

Ueda noted that the yen had reversed its recent sharp losses and this had lowered inflationary pressures as inflation due to imports had eased. Ueda also discussed risks to the economic outlook, such as whether the Fed could guide the US economy to a soft landing and the recent volatility in the financial markets. BoJ senior officials have ruled out rate hikes while the markets shows instability.

Japan will release BoJ core CPI, a closely-watched inflation indicator, early on Wednesday. The index is expected to remain unchanged at 1.8%. This will be followed by the BoJ minutes for the August meeting.

USD/JPY Technical

• USD/JPY pushed above resistance at 144.32 and tested resistance at 145.04 earlier
• There is support at 143.02 and 142.44

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