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The Japanese yen found some relief on Tuesday, strengthening to 154.40 per dollar after a recent slide, as the U.S. dollar pulled back from its one-year high amid profit-taking. The yen rose 0.2% in early trading, recovering from losses following Bank of Japan (BOJ) Governor Kazuo Ueda’s speech, which offered no new insights on a potential rate hike in December.
Image Source: Reuters
“Recent yen weakness had many market participants expecting Ueda to sound hawkish, but in the end, the Governor stuck to his recent narrative,” said Rodrigo Catril, senior FX strategist at National Australia Bank. He noted that economic conditions and inflationary pressures are building a strong case for a BOJ rate hike, but political factors might complicate the decision.
The ruling Liberal Democratic Party (LDP) is reportedly eager to regain public support after underwhelming performance in the recent Lower House elections.
The yen, which has depreciated about 7% since October, briefly breached the 156 per dollar level last week. Its decline raised concerns about potential intervention by Japanese authorities to stabilize the currency.
Meanwhile, the U.S. dollar softened across global markets. The dollar index, which tracks the greenback against a basket of major currencies, edged down 0.4% to 106.26 overnight, reflecting a broader retreat. Sterling held steady at USD 1.2676, while the euro recovered to USD 1.0590 after hitting a one-year low last week.
“You do get bouts of profit-taking after big moves like this,” noted Jarrod Kerr, chief economist at Kiwibank.
The dollar’s strength this month, up more than 2%, has been driven by diminishing expectations for Federal Reserve rate cuts and anticipation that President-elect Donald Trump’s policies—such as tariffs, immigration restrictions, and tax cuts—will fuel inflation in the U.S. economy.
In Australia, the local dollar slipped 0.15% to USD 0.6499 following the release of minutes from the Reserve Bank of Australia’s November board meeting. Policymakers signaled no immediate need to adjust interest rates but emphasized readiness to respond as economic conditions evolve.
Similarly, the New Zealand dollar, or kiwi, dipped 0.24% to USD 0.5880 as markets looked ahead to the Reserve Bank of New Zealand’s meeting next week. Traders have priced in 50 basis points of rate cuts, with expectations of further easing as inflation cools.
The currency markets remain on edge, with global economic policies and central bank decisions continuing to shape movements in the yen, dollar, and other major currencies.
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