BOJ Makes a Mess in the Asian Session!


 The Asian market session saw Bank of Japan (BOJ) governor candidate Kazuo Ueda testifying in parliament resulting in erratic movement of the yen.

Ueda said that monetary policy should be conducted by examining the economic and price outlook, where he sees the Japanese economy recovering from the effects of Covid-19.

However, there is uncertainty in the price and the market is very high. Consumer inflation is at 4%, above the BOJ's target.

The yen initially jumped higher following the remarks, but then erased those gains when Ueda said inflation would fall below 2% around the middle of the next fiscal year.

This is because, Japanese inflation is mostly driven by rising import prices, and they do not need to immediately respond to supply-driven inflation.

This indirectly indicates the next direction Ueda will take after he takes office as governor in April.

Turning to the US dollar, the currency king remained trading stronger even though fourth quarter US gross domestic product (GDP) data was reported to be slightly off from previous readings.

In the Asian session, the dollar index, which measures the greenback's strength, traded steady at 104.55 against a basket of major currencies.

The minutes of the FOMC meeting released on Thursday still supported the US dollar and put pressure on other major currencies to remain traded lower heading into the end of the week.