Yen Set for Longest Losing Streak Since June on Bets BOJ to Hold

The Japanese Yen has been on a losing streak, with the USD/JPY pair rising to near 156.50. This trend is supported by the strength of the US Dollar, which has been boosted by higher US interest rates and expectations of further tightening by the Federal Reserve. In contrast, the Bank of Japan (BoJ) has maintained its dovish stance, with Governor Kazuo Ueda offering a bleaker assessment of the economy and dashing hopes for a rate hike next week. This divergence in monetary policies has led to a tailwind for the US Dollar and additional support for the USD/JPY pair.



The Japanese Yen's recent decline can be attributed to several factors. The BoJ's commitment to yield curve control and its reluctance to raise interest rates have contributed to the Yen's depreciation. Additionally, the BoJ's large-scale asset purchases, including ETFs and J-REITs, have increased the supply of Yen in the market, further weakening the currency. The slowdown in Japan's GDP growth and the BoJ's accommodative policy have also put downward pressure on the Yen.

The Yen's losing streak is set to continue as markets anticipate the BoJ maintaining its ultra-loose monetary policy. The BoJ is expected to keep interest rates at -0.1% and continue purchasing JGBs to control the yield curve. This divergence in monetary policy between the US and Japan is likely to widen the interest rate differential, making the Yen less attractive to investors. As global interest rates and inflation expectations continue to rise, the Yen is likely to face further pressure, potentially extending its losing streak against the US Dollar.

In conclusion, the Japanese Yen's recent losing streak is a result of the BoJ's dovish monetary policy and the divergence in monetary policies between the US and Japan. As the BoJ is expected to maintain its accommodative policy, the Yen is likely to continue its decline against the US Dollar. Investors should closely monitor the BoJ's policy decisions and the global economic landscape to make informed decisions about their portfolios.