Yen in Focus Ahead of Takaichi–Ueda Meeting
Meanwhile, the Japanese yen remained in focus ahead of a highly anticipated first meeting between Prime Minister Takaichi and Bank of Japan Governor Kazuo Ueda. The meeting will reportedly take place at 0630 GMT, with the BoJ’s policy outlook and the effects of yen weakness on the economy likely to be the talking points.
FX Intervention Concerns as USD/JPY Hits Nine-Month High
Japanese Finance Minister Katayama reiterated her concerns about recent FX movements in the Asian session. USD/JPY climbed to a nine-month high of 155.377 on Tuesday, November 18, raising the prospect of yen intervention.
This mirrors the previous intervention episodes, in October and early November, which capped USD/JPY gains.
Policy Divide Could Influence Yen Trends and Carry Trades
Crucially, the outcome of Prime Minister Takaichi and BoJ Governor Ueda’s meeting could influence USD/JPY price trends and yen carry trade flows. Takaichi’s ultra-loose monetary policy stance clashes with Governor Ueda’s recent signals of a potential rate hike as early as December.
Yen Weakness Accelerates Carry Trade Momentum
Notably, USD/JPY has soared 4.98% since Takaichi won the Liberal Democratic Party Election race and became Japan’s first woman prime minister. Fading bets on a December BoJ rate hike sent USD/JPY higher, fueling yen carry trades into risk assets such as US equity futures. Traders will need to ask whether political pressures can override Governor Ueda’s earlier signals. Increased pressure on the BoJ to maintain interest rates at 0.5% could boost risk appetite.