USD/JPY hit a five-month top on Friday in the wake of the Fed's hawkish outlook and the BoJ's decision to keep interest rates steady. Bulls largely shrugged off data showing that Japan's National CPI rose in November, which bodes well for an additional interest rate hike by the BoJ.
The Yen is dropping across the board on Thursday, weighed by a dovish BoJ monetary policy decision. This, coupled with the hawkish stance reflected at Wednesday’s monetary policy statement, has pushed the pair to test levels above 157.00.
The Bank of Japan kept its benchmark interest rate unchanged at 0.25% with Governor Ueda failing to clarify whether they will hike rates in January, as some market sources had anticipated.
Ueda warned that prolonged easing conditions may lead to a surge in inflation but he conditioned the next policy decisions on the evolution of the wage negotiations. Investors reacted by selling the Yen against its main rivals.The Yen was already on its back foot after the outcome of Wednesday’s US Federal Reserve meeting. The bank cut interest rates by 25 basis points but projected two cuts in 2025, instead of the four anticipated in September, which sent US Yields and the USD surging.
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