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The yen weakens for the second day in a row after October US inflation data. The market has almost fully priced in a Fed rate hike in December, and less than a figure remains to the 160 level, near which Tokyo has already entered the market with interventions.
Bank of Japan Governor Kazuo Ueda speaks today, November 6, at 19:00 MSK. Japan's rate is currently 1.25% - the highest since April 1995, and Ueda is expected to hint whether the next move will come on December 18.
On Thursday, November 5, the Japanese yen became the strongest currency of the day: money fled from US tech stocks into it, and the Bank of Japan's minutes added to expectations of a December rate hike.
The DXY dollar index fell to 101.40 (-0.44% for the day) after the Democrats took both chambers of Congress. Yet the yen failed to capitalize on this: USD/JPY holds near 158.32, having lost just 0.24%.
Japanese Finance Minister Satsuki Katayama said on Tuesday, October 27, that the government is ready for decisive action in the currency market. This is a direct hint at intervention - selling dollars from reserves to support the yen.
On October 16, the U.S. Treasury publicly stated that Japan is no longer living in deflation, which means the yen exchange rate must reflect this. This is a repeated call for Tokyo to strengthen the JPY against the USD.
USD/JPY rose to 158.44, and the yen lost about 0.5% after the release of the Bank of Japan's summary of opinions. The market saw no signal in the document for a rate hike as early as October, and the absence of currency interventions further increased pressure on the yen.
The USD/CHF pair rose to 0.8367 on the morning of October 1, a 16-month high, and has been rising for the seventh consecutive trading session. Pressure on the franc was intensified by weak investor expectations for the Swiss economy and the SNB's dovish stance.
