Reading between the lines, it looks like BOJ governor Ueda is alluding to the idea that the Japanese central bank might prefer waiting until March before hiking rates next. He kept pushing the narrative that they don't have much information on the trend in wages and also talking up a lot of uncertainty in awaiting what Trump might do with tariffs next year.
All of that doesn't sound very convincing if they are lining up for a January rate hike. That especially as these developments might not see much change in the next one month.
Ueda also goes on to say that he wants to see "one more notch" before deciding on the next rate hike. I reckon it just means he wants more clarity on one of those two things highlighted above.
And again, it might be a case that they'll only get a better sense of all of that in March. That especially on wages, having to wait on the discussions involving the spring wage negotiations.
For now though, a hawkish Fed and less hawkish BOJ means USD/JPY is free to ramp higher. The pair is now touching 156.00 with little technical resistance in the way of the November high of 156.74 next.
That will be a key resistance point to watch before buyers take aim at the 160.00 mark once again.
The tricky part in all of this is that it is coming right before markets take a breather starting from next week. The thinner flows could exacerbate the market moves before the new year, so it will be interesting to watch how the sentiment from this week plays out in the coming two weeks.
This article was written by Justin Low at
www.forexlive.com.
