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The Japanese Yen struggles to capitalize on Friday’s modest recovery gains against the US Dollar. Doubts over BoJ’s rate hike plan, and the widening of the US-Japan yield differential, weigh on the JPY. Traders now look to the US Consumer Confidence Index for short-term impetus later this Monday.  The Japanese Yen (JPY) kicks off the new week on a softer note and remains within striking distance of a five-month low touched against its American counterpart on Friday. Doubts over when the Bank of Japan (BoJ) will hike interest rates again turn out to be a key factor weighing on the JPY. Furthermore, the recent widening of the US-Japan yield differential, bolstered by the Federal Reserve’s (Fed) hawkish shift, undermines the lower-yielding JPY.  Adding to this, a generally positive tone around the equity markets is seen denting demand for the safe-haven JPY. Meanwhile, strong inflation data released from Japan on Friday left the door open for a potential BoJ rate hike in January or March. This, along with subdued the US Dollar (USD) price action, fails to assist the USD/JPY pair to capitalize on its Asian session uptick to the 156.70 area in the absence of any relevant fundamental catalyst. Japanese Yen lacks bullish conviction amid BoJ rate hike uncertainty The Bank of Japan last week decided to keep the short-term rate target unchanged at the end of the December policy meeting and offered few clues on how soon it could push up borrowing costs.  Japanese government bond yields dropped to the lowest in a month on Friday in reaction to BoJ Governor Kazuo Ueda’s dovish signals and a very cautious tone on further monetary policy tightening. The benchmark 10-year US government bond yield rose to its highest level in more than six months last week and the resultant widening of…

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Filed under: News - @ December 23, 2024 3:21 am