(Bloomberg) -- Traders hoping for a hawkish tone from the Bank of Japan’s Kazuo Ueda at a press conference on Friday were left disappointed, undermining hopes of a yen rally.
The central bank kept rates on hold in the morning, as widely anticipated, but analysts and traders were paying more attention to Ueda’s post-decision press conference. Hawkish rhetoric was likely to have given the yen boost, analysts said ahead of the meeting. Instead, Ueda showed little urgency to hike rates, and said that upside risks to inflation are easing.
Here is a selection of comments from analysts:
Credit Agricole CIB (Valentin Marinov, strategist)
“The BoJ’s patience coupled with the recent improvement in risk sentiment (thanks to the dovish Fed on Wednesday) could weigh on the JPY at a time when investors’ appetite for risk and carry trades may be returning. This could mean that the JPY could underperform high-yielding currencies, like the GBP for example.”
Rabobank (Jane Foley, strategist)
“The comments could help to stabilise USD/JPY after weeks of volatility. Although Japanese officials are no doubt relieved that the direction of USD/JPY has turned, equally they are likely wary about the impact of too fast an appreciation of the JPY.”
ATFX (Nick Twidale, chief analyst):
“We’ve seen a bit of volatility fatigue in the yen after excessive moves over the last couple of days,” he said before the press conference. Ueda would need to be quite hawkish and guide to a rate hike into year-end in order for the yen to move higher, he said. “If not, then I’d be looking for levels to sell yen into the weekend and next week”
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