USD/JPY hits new YTD high amid Fed/BoJ monetary policy divergence

USD/JPY resumes its uptrend, prints a new year-to-date (YTD) high of 146.68, on an upbeat sentiment, with Wall Street opening the week on a higher not

conditions due to the UK’s Summer Bank Holiday. Hence, the Japanese Yen extended its losses to three straight sessions spurred by dovish remarks by the Bank of Japan’s Governor Kazuo Ueda. The pair exchanges hands at 146.60.US equities resumed their uptrend following hawkish remarks by the US Federal Reserve Chairat Jackson Hole. Despite being data-dependent, Powell’s words reinforced the US central bank hawkish stance, which triggered a leg-up in the USD/JPY pair.

On the Japanese front, the BoJ Governor Kazuo Ueda said that underlying inflation is still below target and justified the current “dovish” monetary policy stance by the BoJ, even though July’s core consumer inflation rose by 3.1%. Ueda added that inflation “is expected to decline.” Although the BoJ tweaked its Yield Curve Control to a 0.50%-1% flexible target, the 10-year Japanese Government Bonds yield has failed to break higher, which could shift thebias bearish. Once the BoJ signals it is ready to normalize its monetary policy, the USD/JPY could resume lower after posting gains of 11.85% in the year.

A busy economic calendar could rock the boat in the week ahead. The US docket would feature JOLTs report, the CB Consumer Confidence, the release of the

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