The Japanese Yen (JPY) is outperforming all G10 currencies, rising 0.6% against the US Dollar (USD) as markets interpret Governor Ueda’s recent comments as a hawkish turn. Traders now expect a tightening of about 21 basis points at the Bank of Japan’s meeting on December 19, a sharp increase from last week’s forecast, according to a report by Sean Osborne and Eric Theort, chief FX strategist at Scotiabank.
The Japanese yen is outperforming the entire G10 ahead of the Bank of Japan meeting in December
“The Japanese yen rose 0.6% against the US dollar and is outperforming all G10 currencies as we head into the North American session on Monday, rising on a hawkish interpretation of BOJ Governor Ueda’s comments.”
“Markets have repriced their expectations for a December rate hike on the back of Governor Ueda’s recent comments in which he stated that the Bank of Japan will ‘consider the pros and cons of a rate hike.’
“Short-term interest rate markets now have a December high of 21 basis points, a significant increase from single-digit levels seen as recently as last week. The two-year US-Japan spread has reached a new low, providing fundamental support for the yen. The Bank of Japan’s next meeting is scheduled for December 19.”
