JPY snowed under as BoJ fail to hint at hike

Market reports
Thanim Islam
  • Yen weakens on unchanged monetary policy
  • EU inflation key today

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JPY weakened early doors this morning, with the Bank of Japan sticking to previous monetary policy parameters and keeping their forward guidance unchanged. In recent weeks, JPY had been gaining on anticipation that the BoJ will be lifting interest rates out of negative territory next year, but at least in this morning's meeting, there are no indications on when this is likely to happen.


Market rates

* Daily move - against G10 rates at 7:30am, 19.12.23

** Indicative rates - interbank rates at 7:30am, 19.12.23

Table (41)-1

Data points

Table (42)-1


  • EUR: ECB Simkus, Kazimir, Vujcic
  • GBP: BoE Breedon
  • USD: Bostic

Our thoughts

Inflation numbers from Europe will be the highlight for today. If there are signs that inflation is falling quicker than expected then it seems likely that markets could well price in a higher chance of a rate in March, which ultimately could cause the EUR to weaken. We also wait to hear from ECB, BoE, and Fed speakers today.

Chart of the day

After a month of GBPJPY falling on speculation that we may see a hawkish turn on monetary policy by the BoJ, we are continuing to see these moves retrace as markets reduce the possibility of a near-term change in interest rates following an unchanged BoJ. GBPJPY is now up 2.4% from its recent lows.

19122023 cotd
Source: Bloomberg Finance L.P.

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