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USD/JPY Surpasses 131.80 As Apprehension Swells Ahead Of BoJ Governor Selections
USD/JPY has forcefully exceeded 131.50 on fresh concerns about potential interest rate hike from the Fed. Fed Waller finds the US labor market quite robust and believes that it could stimulate consumer spending ahead. Investors are anxiously awaiting the announcement of the list of candidates for BoJ Kuroda's replacement.
During the Tokyo session, the USD/JPY pair surged above the crucial resistance level of 131.80. The asset has showed significnat gains as investors are getting worried ahead of the announcement of the contenders' list for the replacement of Bank of Japan (BoJ) Governor Haruhiko Kuroda. BoJ’s Kuroda has been keeping an ultra-loose monetary policy for a protracted period and the Japanese administration wants to make planning for an exit from the expansionary policy with the successor.
The remark from US President Joe Biden that the United States will not witness recession in 2023 and 2024 has pumped some strength into the risk-sensitive assets. S&P500 futures are displaying slight increases in the Asian session following a negative Wednesday, portraying a minor recovery in the risk appetite of investors.
The US Dollar Index (DXY) is failing to sustain over 103.00 despite Federal Reserve (Fed) chair Jerome Powell and his teammates are holding to the strategy of rising interest rates further and keeping them constant at elevated levels for a longer duration.
Commenting on interest rate guidance, Fed Governor Christopher Waller indicated that the central bank will retain its current plan of action, which has seen eight interest rate hikes since March 2022, as reported by CNBC. Regarding the job market, the Fed policymaker finds it quite robust and believes that it could stimulate consumer spending ahead.
On the Japanese Yen front, investors are particularly focused on the list of nominees for the fresh BoJ Governor. Japanese Prime Minister Fumio Kishida said on Wednesday, “In process of choosing the next Bank of Japan (BoJ) Governor nominee, they are cognizant of very intense market focus on the decision.”
Meanwhile, a statement from OCBC notes “Focus this week will be on the list of BoJ nominees that is likely to be given to parliament on 10 February while there are speculations suggesting a postponement to next week. The selection of Amamiya would be most helpful for the USD/JPY upside, whereas the appointment of Yamaguchi could pull down the Japanese Yen.
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