Week in review
The USD/JPY opened the week at 155.90. The pair fell to above 154.50 during overseas trading on 1 December after market participants interpreted BOJ Governor Kazuo Ueda's speech and press conference that day as effectively pre-announcing a rate hike at this month's monetary policy meeting. The pair then erased those losses and climbed to this week's high of 156.18 through 2 December after US yields rose sharply. The dollar turned broadly weaker and the USD/JPY moved down to around 155.00 through 3 December after media reports suggested that National Economic Council (NEC) Director Kevin Hassett is likely to be nominated as the next Fed chair, reinforcing expectations for rate cuts. On 4 December the USD/JPY initially rebounded to around 155.50, then broke below 155 again just before overseas investors entered the market after a report that the Takaichi administration would accept a BOJ rate hike. The pair fell to the low for the week of 154.51, where buying interest emerged. The USD/JPY then recovered back towards 155 after US initial jobless claims came in better than expected, pushing US yields higher and supporting dollar buying. The USD/JPY was trading below 155.50 at the time of writing on 5 December (Figure 1). G10 currencies have broadly strengthened against the dollar this week after expectations for Fed rate cuts increased, leaving the dollar weaker across the board. The Australian dollar has been one of the strongest performers after markets pared back expectations for rate cuts, and the yen has also been among the outperformers following Governor Ueda's remarks (Figure 2).
FIGURE 1: USD/JPY
Note: As at 14:00 JST on 5 December
Source: EBS, Refinitiv, MUFG
FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK
Note: As at 14:00 JST on 5 December
Source: Bloomberg, MUFG