Following a slight rebound in the US dollar on Thursday, USD/JPY rose to around 155.60. Many Japanese policymakers called for interest rate stability to avoid the risk of inflation overshoot. The Fed's Collins stressed the need to keep interest rates high for an extended period of time to control inflation, pushing the dollar higher.
In early Asian trading on Thursday, USD/JPY was trading in positive territory for the fourth day in a row, around 155.60. However, concerns about further intervention by the Bank of Japan (BoJ) are likely to keep the Japanese yen (JPY) from falling for the time being.
Members of the Bank of Japan's board of directors decided to keep the key interest rate unchanged at 0% at the April monetary policy meeting. Board members took a hawkish stance at the April policy meeting, with many policymakers calling for interest rate stability to avoid the risk of inflation overshoot, according to a summary of opinions from the Bank of Japan. I asked for The statement highlighted recent comments by Bank of Japan Governor Kazuo Ueda that signaled the prospect of multiple interest rate hikes in the coming months and a possible rise in short-term borrowing rates.
Early Wednesday morning, Japan's top currency diplomat, Masato Kanda, intervened verbally, saying he would take appropriate action if necessary to prevent the yen from appreciating. Despite this, Mr. Kanda declined to comment on foreign exchange intervention. Japanese authorities may take further steps to contain the Japanese currency, pushing up the yen and limiting its upside.
On the other hand, the monetary policy gap between Japan and the US continues to support the USD/JPY. Meanwhile, Boston Fed President Susan Collins said Wednesday that interest rates are likely to remain high for a long time because it will take longer for inflation to fall to target than previously thought. Hawkish comments from Federal Reserve officials have pushed up the dollar, providing a tailwind for the dollar. Separately, traders will focus on Friday's preliminary reading of the University of Michigan Consumer Confidence Index, which is expected to fall to 76.0 in May from 77.2 in April.
