Japan's yen in spotlight ahead of 'live' BOJ meeting
By Vidya Ranganathan
SINGAPORE (Reuters) — The U.S. dollar and most major currencies were flatlining in early trades on Monday, barring a blip in sterling, as a Japanese holiday and a bunch of upcoming central bank meetings sucked the air out of markets.
The Bank of Japan's policy meeting on Friday is the highlight of the week in Asia, after Governor Kazuo Ueda stoked speculation of an imminent move away from ultra-loose policy. In a week packed with central bank meetings, decisions are also due from the U.S. Federal Reserve on Wednesday and Bank of England on Thursday.
The yen was flat versus the greenback at 147.82 per dollar with markets in Japan closed for a national holiday. In the week since Ueda's remarks about a early move from negative rates, it has dropped 1.3% and taken losses for 2023 to more than 11%.
Carol Kong, economist and currency strategist at Commonwealth Bank of Australia (OTC:CMWAY), said she expects the yen to be volatile leading up to the policy meeting.
«In terms of the direction of travel, dollar/yen can definitely track higher,» Kong said.
Investors may have potentially misinterpreted Ueda's comments. And the recent spell of weakness in Japanese wages and possibility prices too could soften and push the BOJ farther from its inflation goal, the case for a BOJ policy tightening is still not very strong, Kong said.
«So that means dollar yen can track higher, particularly if Governor Ueda sounds dovish and dashes hopes of policy tightening at the upcoming meeting,» she said.
The dollar index was a tad lower at 105.23, with the euro up 0.11% at $1.0667. Sterling was last trading at $1.2397, up 0.06% on the day.
Most investors expect divergences in economic growth and in yields will keep the dollar
Read more on investing.com
