- USD/JPY drops sharply near 146.00 as BoJ’s Ueda delivers hawkish interest rate guidance.
- BoJ’s Ueda reiterated the need to raise interest rates further this year.
- The Fed is now more focused on controlling downside risks to the US labor market.
The USD/JPY pair fell sharply near 146.00 in the North American session on Tuesday. The asset faces selling pressure as the Japanese Yen (JPY) strengthens following hawkish comments on interest rates from Bank of Japan (BoJ) Governor Kazuo Ueda.
Kazuo Ueda reiterated in a paper presented to a government panel on Tuesday that the central bank will not hesitate to raise interest rates further if the economy and inflation perform as expected, Reuters reported. Inflationary pressures in the Japanese economy remain stubborn. Tokyo’s Consumer Price Index (CPI), excluding fresh foods, released on Thursday, rose at a faster pace of 2.4% in August from estimates and July’s release of 2.2%.
USD/JPY remains on the defensive despite further gains in the US Dollar (USD). The US Dollar Index (DXY), which tracks the value of the greenback against six major currencies, is up towards a two-week high of 102.00.
The US Dollar is gaining ground as investors turn cautious ahead of the US (US) Non-Farm Payrolls (NFP) data for August, due on Friday. Market participants will focus on official labor market data as the Federal Reserve (Fed) is now more focused on preempting labor demand, given that officials are confident that price pressures will sustainably return to the bank’s 2% target.
In today’s session, investors will focus on the US ISM manufacturing PMI data for August, due at 14:00 GMT. Economists expect that activities in the manufacturing sector have contracted at a slower pace, with the PMI coming in at 47.5 from July’s reading of 46.8.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the spread between Japanese and US bond yields, and risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key to the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its major currency peers. This process has been exacerbated more recently by a growing policy divergence between the BoJ and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.
The Bank of Japan’s stance of maintaining an ultra-loose monetary policy has led to an increase in policy divergence with other central banks, in particular with the US Federal Reserve. This favours the widening of the spread between US and Japanese 10-year bonds, which favours the Dollar against the Yen.
The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money into the Japanese currency due to its perceived reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.