EUR/JPY Gains Momentum Near 160.00 in Early European Session
- EUR/JPY recovers to near 160.00 in Friday’s early European session, gaining 0.45% on the day.
- BoJ’s Ueda said central bank will keep adjusting the degree of easing if our economic, price outlooks are to be realised.
- Investors await the ECB’s Lagarde speech for fresh impetus.
The EUR/JPY cross gains momentum around 160.00 during the early European session on Friday. The Bank of Japan (BoJ) decided to keep its policy rate unchanged, as widely expected. However, the uncertain outlook of the BoJ monetary policy is likely to cap the upside of the Japanese Yen (JPY) for the time being.
BoJ Keeps Benchmark Interest Rate Steady
The BoJ kept its benchmark interest rate steady at around 0.25%, the highest level since 2008, at the conclusion of a two-day meeting on Friday. “The central bank is expected to hike rates in October, and “further dial back monetary support this year despite a poor run of economic data,” noted Stefan Angrick, associate director at Moody’s Analytics.
BoJ Governor Kazuo Ueda said during the press conference that the Japanese central bank “will keep adjusting the degree of easing if our economic and price outlooks are to be realized.” Ueda added that uncertainties surrounding Japan’s economy and prices remain high, and he will monitor the economy and market trends with an extremely high sense of urgency.
However, he affirmed there is no change to his thinking that the BoJ will keep raising rates if the economy moves in line with the outlook. The rising expectation that the BoJ will raise the interest rate later this year could lift the JPY against the Euro (EUR).
ECB President Lagarde’s Speech in Focus
On the other hand, the European Central Bank (ECB) reduced its interest rates last week during its September meeting. Investors will take more cues from ECB President Christine Lagarde’s speech later on Friday. Any dovish remarks from Lagarde could weigh on the shared currency in the near term, while the hawkish tone might lift the EUR.
Overall, the currency market is closely watching central bank policies and speeches for guidance on future monetary policy decisions, which could impact currency pairs like EUR/JPY.
Analysis
The EUR/JPY pair’s movement is influenced by both the Bank of Japan and the European Central Bank’s actions and statements. Here’s a breakdown of how this news can affect individuals:
- Interest Rates: Changes in central bank interest rates can impact the value of currencies. Higher rates can attract foreign investment, leading to currency appreciation.
- Policy Outlook: Statements from central bank officials about future policy adjustments can give insights into the economic outlook and potential currency movements.
- Market Sentiment: Investor reactions to central bank decisions and speeches can influence market sentiment and currency trends.
For individuals, understanding these factors can help in making informed decisions about currency exchange, investments, and financial planning. Keeping an eye on central bank actions and statements can provide valuable insights into the global economy and financial markets.