NEW YORK- The dollar gained against the Japanese yen on Friday after Bank of Japan (BOJ) governor Kazuo Ueda said it was too soon to declare victory on inflation, but dipped against the euro after weaker than expected US economic data.
In cryptocurrencies, bitcoin held just below a more than two-year high reached on Wednesday.
Ueda said it was too early to conclude that inflation was close to sustainably meeting the central bank’s 2 percent inflation target and stressed the need to scrutinize more data on the wage outlook.
That sent the yen lower, reversing a move from Thursday when BOJ board member Hajime Takata said that the central bank must consider overhauling its ultra-loose monetary policy, including an exit from negative interest rates and bond yield control.
Inflation expectations and the path of BOJ policy will likely depend on negotiations between large firms and unions over wage increases.
“If we’re right in expecting wage negotiations are going to lead to more signals that inflation is becoming a little bit more persistent in Japan, then we expect BOJ to exit negative interest rate policy,” said Bipan Rai, North American head of FX strategy at CIBC Capital in Toronto.
However, “I feel like it is priced in already”, Rai added. “Beyond there we’re really looking at what sort of tweaking they do to the yield curve control program.”
Big firms will settle negotiations on next year’s pay with unions on March 13, ahead of the BOJ policy meeting on March 18-19. Economists project wage hikes of about 3.9 percent on average, exceeding a 3.58 percent pay rise deal struck in 2023 that was the highest in three decades. – Reuters
