The yen weakened following the Bank of Japan’s report that there is little urgency to address the side effects of the YCC.
The US New Unemployment Insurance Claims (NUIs) released yesterday came in at 228,000, better than prior market expectations, and the USD/JPY exchange rate broke through 140 yen and surged to around 140.50 yen. However, risk-off moves were then influenced by the fall in tech stocks, with the USD/JPY exchange rate falling back to the upper ¥139 range.
The Japanese Consumer Price Index released today came in at 3.3%, higher than the forecast of 3.2%, which pushed the USD/JPY to around 139.80 yen, but was pushed back to the upper 140 yen range by real demand buying.
Given this situation, it was thought that the weekend would start without any major developments, but Bloomberg reported that “the Bank of Japan recognises that there is little urgency to respond to the YCC side effects at this time”, which sent the dollar to 141.00 yen, and then to around 141.95 yen.
The upside was restrained by comments from Japan’s Finance Ministry official Kanda, who said that the BOJ had no intention of tightening monetary policy, which would likely mean that the yen would continue to weaken.