The worst performing major currency in 2023 has begun the New Year in a similar fashion, with the yen once again trading lower against pretty much every other currency globally so far this year.
Expectations for the first interest rate hike from the Bank of Japan continue to be pushed further into the future following the earthquake on New Year’s Day. Indeed, last week was the worst for the yen against the dollar since 2022, as investors bet that the powerful 7.6 magnitude quake would weigh on domestic economic activity and cause the BoJ to adopt an even more cautious stance to normalising policy.
Communications from BoJ members over the holiday period were mixed.
Governor Ueda hinted that a change in policy could soon be on the way during his speech on 25th December, although he somewhat tempered these remarks by saying that a policy change would not be forthcoming in January. This Tuesday’s wage growth figure could be highly important for the yen, as this data point appears to be the one that BoJ members are watching the closest when it comes to the timing of tightening. Evidence of solid earnings pressure would be welcome news for JPY, and could lead to a sharp snap back in the curre
