USD/JPY is down 1.4% to 145.30 currently with the low earlier briefly touching 145.05 in European trading. The drive lower owes to BOJ governor Ueda’s remarks from Asia trading before he went on to align with Tokyo to pin down the spring wage negotiations as the potential turning point on policy here. Other dollar pairs are little changed as all the action has been in the Japanese yen instead:
As you can see, other major currencies are also seeing losses around 1.3% to 1.5% against the yen as well currently.
I reckon this might be a bit of a precursor as to what traders might be looking for in Q1 next year. But the real question is, will be the BOJ actually follow through on that? Yen longs might be starting to build up as early as now, hoping for that. However, the negative carry is still something that I’d be mindful about if you want to stay structurally long in the Japanese currency. It can be a rather painful one.
And not to mention, there is still the risk of the BOJ not following through and not using the stronger wages outcome to conduct a policy pivot. I mean, that was already supposed to be the narrative this year when Ueda took over. And look where we are now.