USD/JPY Flows - BoJ Ueda underscores hawkish lean on upside inflation risks
BoJ's Ueda largely echoes, while underscoring more hawkish tilt
Interesting overnight session as the Kospi bounces hard, up 18%, boosting regional and tech sentiment. USD/JPY doesn’t see further incident, drifts up ½ % post intervention, as the BoJ was largely as expected if with a more hawkish tilt, noting there is a risk underlying inflation could deviate above 2% target. Japan 2s are up around 3bp, and the market does have probability of a hike next meeting just above 20%.
Notably that US Treas.Sec. Bessent on Fox News yesterday seemed to somewhat endorse the MoF action saying Japan may have intervened and the yen "seems very undervalued to me."
BoJ Ueda speaking now. While mainly echoing standard comment, the remark that will hold careful discussions at the next meting onwards with risks of inflation overshooting more than in past in mind, and that risks of prices overshooting beyond 2% is of scale that is potentially too big to ignore, add to the more immediacy of the hawkish slant.