Forex Top Team

BOJ Governor Ueda Cools YCC Revision Speculation, Dollar-Yen Decline Lulls


Shutaro Ueda, the Governor of the Bank of Japan (BOJ), poured cold water on the speculation of Yield Curve Control (YCC) revision, and the decline in USD/JPY seems to have paused. In today’s Tokyo market, USD/JPY is trading in the 139 yen range. It has regained some ground after last week’s decline to the mid-137 yen level. The decline in USD/JPY has been attributed to the weakening of the US dollar and the strength of the yen. The weakening of the US dollar is due to the slowdown in a series of US inflation indicators, which has led to expectations that the US monetary authorities will pause rate hikes after the July hike. On the other hand, the strength of the yen can be attributed to the risk aversion due to speculation about China’s economic slowdown and the spread of YCC adjustment speculation mainly from foreign investors ahead of the BOJ policy meeting next week.

However, yesterday, BOJ Governor Ueda stated that “If there is no change in the recognition that there is still a distance to the Bank of Japan’s target of a sustainable and stable 2% inflation, our stance of persistently continuing monetary easing will not change.” This has changed the mood and poured cold water on the speculation of YCC revision. It seems to be following a pattern of anticipation before the BOJ policy meeting.

In addition, in yesterday’s London market, Klaas Knot, the President of the Dutch central bank, stated that “Rate hikes after July are possible but not certain” and “Core inflation seems to have leveled off.” The market reacted to the easing of hawkishness, especially with European stocks showing strength. Today, the Nikkei average is showing strength, and there is a positive reaction of a weaker yen and higher stock prices.

The UK’s June Consumer Price Index (CPI), announced today, showed slower-than-expected growth. The year-on-year figure was +7.9% and the core year-on-year figure was +6.9%, both falling below market expectations. There is a possibility that there may be some dimming in the expectation of a 50 basis point rate hike at the August Monetary Policy Committee (MPC) meeting. However, the inflation rate itself is still far from the 2% target. It will be important to carefully observe how sustainable the sharp decline in the pound following the release of the data will be.


It seems that the strength of the yen and the euro has been somewhat curbed. Today, a potential opportunity lies in selling EUR/USD. However, given the proximity of resistance levels, entry opportunities may be limited. If there is a chance, I plan to enter a trade.

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