Usdjpy Trades Strong On Boj Rumors

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Usdjpy Trades Strong On Boj Rumors

Usd/Jpy Trades Above 149.00 As Boj Remains In Focus

After touching the 149.35 handle on Monday, the USD/JPY appears to be consolidating its gains as traders are now looking toward the BoJ and US Federal Reserve meetings.

On the BoJ side, there are some rumors that the central bank may decide to postpone the plan to end negative rates. This may not be good for the JPY, but the greenback will rejoice, as evidenced by the USD/JPY's positive trend.

Boj Might Delay Policy Pivot

On Friday, the USD/JPY jumped and touched the 148.80 handle as JPY showed weakness in rumors of a potential delay in the policy pivot. It appears that the same sentiment continues today and on Monday.

Despite these rumours, a lot of fundamental factors actually hint that the BoJ can end the negative interest rates. For starters, Japan's CPI has continued to print above 2% consistently in the last few months.

Additionally, major Japanese firms have also agreed to raise the wages to record highs. According to experts, such a wage increase was only last seen 33 years ago which highlights the severity of this change.

Meanwhile, Shunichi Suzuki (Japan's Finance Minister) also commented that the deflation phase had ended. According to him, the government will take any necessary steps to ensure that wage growth continues in 2024.

Looking ahead, the market players will be focusing on the upcoming press conference by the BOJ. This meeting will shed light on whether the central bank is really keen on ending negative rates or if all of it is just a rumor.

On the US side, it appears that inflation remains stubborn, which has hampered June's rate cut chances. Now, it seems that the economy with the most negative news will be the loser in the USD/JPY pair.

If we look at the US Dollar Index (DXY), it is seen as near 103.50, which is a 3-week high. The bond yields (10 years) also remain strong at nearly 4.31%.

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