Authorized and Regulated Entities: SARACEN MARKETS (PTY) LTD

Yen Set for Further Decline as Bank of Japan Disappoints with Lack of Bond Purchase Details

1 month ago

The yen is poised to extend its recent losses after the Bank of Japan (BOJ) failed to provide specific details on its plans to cut bond purchases, leading to a more dovish outcome than markets had anticipated. Japan’s currency is expected to weaken beyond 158 per dollar, with the BOJ’s tightening pace slower than market expectations and the central bank’s cautious stance prompting yen selling. The yield gap between Japan and the US may persist until the Federal Reserve implements interest-rate cuts, maintaining a bearish bias for the yen.

In contrast, the Fed’s preferred inflation gauge, the personal consumption expenditures price index, softened in May compared to the previous month. This data opens the possibility for the Fed to consider an interest rate cut later this year. In the commodities market, oil prices fell as US economic data indicated cooling inflation, while gold prices remained steady.

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