Japanese Yen attracts fresh sellers after BoJ Governor Ueda’s not-so-optimistic comments

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  • Bank of Japan Kazuo Ueda said this Monday that the central bank will continue to raise policy rates, adjust the degree of monetary support if the economy, and prices move in line with the forecasts.
  • Ueda added that Japan's economy is recovering moderately albeit there are some weak signs, and that the timing of the rate hike will depend on economic, price, and financial outlook.
  • Japan's Finance Minister Katsunobu Kato warned on Friday that the government will scrutinize the FX market with very high vigilance and take appropriate action against excessive moves.
  • US President Joe Biden authorized Ukraine to use US-supplied long-range missiles to strike deeper inside Russia, raising the risk of a further escalation of geopolitical tensions.
  • The US Dollar remains on the defensive following the post-US election rally to the year-to-date peak touched last Thursday, though any meaningful depreciation seems elusive. 
  • Investors seem convinced that US President-elect Donald Trump's touted policies will be inflationary, which could limit the scope for further rate cuts by the Federal Reserve.
  • Adding to this, the recent comments from influential FOMC members, including Fed Chair Jerome Powell, forced investors to scale back their bets for more aggressive rate cuts. 
  • Powell said last Thursday that with the economy growing steadily, a strong job market, and inflation still above the 2% target, there’s no need to hurry into cutting interest rates. 

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