Japanese Yen Falters as Kuroda Expands on Policy
- The Japanese Yen slipped a little as Bank of Japan Governor Kuroda took the stage in Tokyo
- It’s hard to see a clear link, as he had little new to offer
- His assertion that negative rates are appropriate may have done the trick
The BoJ left all major policy settings alone as the markets had expected, but it did increase its Japanese growth forecast for this fiscal year. Overall, it’s quite hard to pin USD/JPY’s rise directly on anything Kuroda said at his press conference in Tokyo, as he largely stuck to observations already made when the decision was announced a couple of hours earlier.
Kuroda did put some flesh on those bones, however. He said that weak consumer prices last year led to inflation forecasts for 2017 and 2018 being unchanged today. He also reminded his audience that the BoJ sees prices hitting the 2% target around fiscal 2018. But he pointed out that we are still only halfway toward that level now. He also said that his fellow policy board members Takehiro Sato and Takehide Kiuchi didn’t think that long-sluggish prices would rouse themselves sufficiently to hit the target over this timeframe.
One possible Yen curb was Kuroda’s assertion that negative rates are appropriate if the BoJ’s price target is to be hit. But this is hardly news, and the BoJ’s view on the appropriateness of negative rates has been clear for many months.
The specter of Donald Trump looms over everything now, discernible here in Kuroda’s expressed concerns that protectionism “could shrink” global trade and his hope that it won’t spread widely. In yet another effort by Tokyo to spur Japanese employers to set parsimony aside, Kuroda took his chance to suggest that conditions are ripe for wage increases in Japan.
In true BoJ style he also hoped that inflation expectations would reflect the reality of inflation data, although this has not been the case for some time, so used to low prices are Japanese consumers.
In any case, USD/JPY got up to 113.72 after he spoke from 113.43 just before he got up, but it seemed to be failing at that high as the press conference wound down.
Up, but faltering: USD/JPY
Chart Compiled Using TradingView
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.