What will happen to USD/JPY after remarks by Bank of Japan Deputy Governor Uchida? Will the yen weaken? FX impact
If you only look at Vice Governor Uchida's remarks this time,
"There are some yen-strengthening factors, but they do not change the overall dollar-yen trend significantly."
is the impression
Reasons are,
recognition of economic recovery
awareness of upside inflation risks
maintenance of the stance of additional rate hikes
these three are, in fact, factors that would favor buying the yen (yen appreciation)
However, at the same time,
the timing of rate hikes is undecided
the pace of rate hikes depends on data
there is no discussion of a 0.5% rate hike
also saying this,
from the market perspective
"BOJ is willing to continue raising rates, but not in a hurry"
is the assessment
Therefore, in terms of impact on USDJPY,
short term
almost neutral to slightly yen-strengthening
mid term
depends on Japan's future prices and wages
direction of USDJPY
rather now
FOMC
US employment data
CPI
US interest rates
have far greater influence.
For example,
if the FRB hurriedly lowers rates → dollar weakness, yen appreciation
if the FRB maintains high interest rates → dollar strength, yen weakness
and thus a single BOJ statement is unlikely to move USDJPY by several yen.
From the perspective of FX traders, in one line:
"The BOJ is not leaving yen depreciation unaddressed, but it has not issued a strong message to aggressively push for yen appreciation. Therefore, in the near term, USDJPY depends on the United States."
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