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HFM’s Outlook 2023: Japan and the Yen


Japan and the Yen – 2023 Outlook

The Japanese Yen was the weakest currency in 2022 because of the Bank of Japan’s commitment to maintaining a loose monetary policy, effectively widening the Yield differentials with other major economies – particularly the US. The Federal Reserve was, however, the most hawkish of the major central banks. It raised interest rates to the maximum range of 4.50%. USDJPY surged to 32% in October 2022. But, the Federal Reserve was the most hawkish of all the major central banks, raising interest rates to the upper band of 4.50%. The Fed became less hawkish in the final 2 months of 2018, slowing down the pace of rate rises. 

Markets are watching to see if the BOJ will keep their promise to pursue massive monetary stimulus and low rates of interest, especially after Governor Kuroda stated that he does not plan on raising rates despite other central banks increasing rates quickly to stem rising inflation.

In April 2023, Haruhiko Kuroda will step down after his 10-year tenure as Governor of the Bank of Japan and a new Governor will emerge – Deputy Governor Masayoshi Amamiya and former Deputy Governor Hiroshi Nakaso are currently tipped as the forerunners. Kuroda was a strong advocate for the Bank of Japan during his term as governor.

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