USD/JPY Targets 148.50 as Bank of Japan Holds Interest Rates Steady

USD/JPY rebounds from Thursday’s losses following the Bank of Japan’s decision to keep interest rates unchanged. As expected, the BoJ maintained its current rates at -0.1%. During early European trading on Friday, the spot price is hovering around 148.30.

In a press conference after the September policy meeting, BOJ Governor Kazuo Ueda hinted at the possibility of ending yield curve control and adjusting negative interest rates when 2% inflation is within reach. He emphasized that the BOJ’s policy decision-making process remains unchanged, with careful analysis of new data at every monetary policy meeting.

Ueda also mentioned that inflation has not yet reached a stable 2% level and that the next monetary policy decision in October will consider data including the government’s extension of gasoline subsidies. The Bank of Japan is prepared to implement further easing measures if necessary due to uncertainty in economic conditions, price trends, and currency and financial markets.

Japan’s National Consumer Price Index for August showed a reading of 3.2%, slightly lower than the previous rate of 3.3%. The National CPI ex-Fresh Food remained consistent at 3.1% against expectations of 3.0%.

The US Dollar Index is trading higher at 105.40, partially driven by US Treasury yields reaching the highest level since 2007. Traders are monitoring economic data releases, particularly the preliminary US S&P Global PMIs for September, to gain insights into the US economy and potential trading opportunities involving the US Dollar.

Recent economic data from the US presented a mixed picture, initially strengthening the Greenback with positive labor market indicators. However, it later experienced a correction.

US Initial Jobless Claims for the week ending September 15 decreased to 201,000, the lowest level since January, outperforming expectations and signaling a resilient labor market. The Philadelphia Fed Manufacturing Survey for September declined to a reading of 13.5, falling below expectations. Existing Home Sales for August saw a decrease to 4.04 million, deviating from expectations of an increase to 4.10 million.

As anticipated, the Federal Reserve decided to keep interest rates within the 5.25-5.50% range during its latest meeting. Fed Chairman Jerome Powell reiterated the Fed’s commitment to achieving a 2% inflation target and expressed readiness to raise rates if needed.