USD/JPY holds positive ground above 155.50 following the BoJ Summary of Opinions
|- USD/JPY gains ground near 155.60 amid a modest rebound of USD on Thursday.
- Many Japanese policymakers called for for steady interest rate to avoid the risks of inflation overshoot.
- Fed’s Collins emphasised the need to hold rates higher for longer to curb inflation, boosting the USD.
The USD/JPY pair trades in positive territory for the fourth consecutive day around 155.60 during the early Asian trading hours on Thursday. However, the fear of further intervention from the Bank of Japan (BoJ) is likely to cap the downside of the Japanese Yen (JPY) for the time being.
The BoJ board members decided to hold the key interest rate steady at 0% at its April monetary policy meeting. According to the Bank of Japan (BoJ) Summary of Opinions, board members turned hawkish at their April policy meeting, with many policymakers calling for a steady interest rate to avoid the risks of inflation overshoot. The statement highlighted BoJ Governor Kazuo Ueda's recent comments indicating the prospect of multiple rate rises in the coming months, as well as the possibility of an increase in short-term borrowing rates.
Early Wednesday, Japan's top currency diplomat, Masato Kanda, came with a verbal intervention, saying that he would take appropriate action if it’s necessary to prevent the JPY. Nonetheless, Kanda declined to comment on the FX intervention. The possibility of further steps from the Japanese authorities to prevent its currency might boost the JPY and cap the pair’s upside.
On the other hand, the monetary policy gap between the United States and Japan continues to support USD/JPY. Meanwhile, Boston Fed President Susan Collins stated on Wednesday that the interest rate will likely stay higher for longer, as it will take longer than previously thought to bring inflation down to target. The hawkish remarks from Fed officials lift the Greenback and act as a tailwind for the pair. Apart from this, traders will monitor the preliminary University of Michigan Consumer Sentiment Index on Friday, which is expected to drop to 76.0 in May from 77.2 in April.
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