Key Takeaways

  • The Japanese yen is in a selloff mode after the Bank of Japan maintained its negative interest rates
  • The USD/JPY pair has been climbing over the past three days, reaching close to 145.00

Interest Rates Unchanged

The USD/JPY pair drifted higher earlier this week and continued its upward trend on Wednesday on news from the Bank of Japan. The central bank said yesterday it is keeping its negative interest rate unchanged for the time being, pushing back on expectations that an interest-rate tweak could come by the end of the year.  

Traders were largely caught by surprise as the pair gained a little over 1% on Tuesday, crossing 144.00 and eyeing the 145.00 threshold. A slight reprieve arrived today as the pair slipped moderately but is still up for the week.  

The Bank of Japan previously communicated it has started mulling over the prospects of changing up its monetary policy. Such a change would be the first monetary policy shift in seven years as the Japanese central bank pivots away from being the only one to offer negative interest rates today.  

In a press conference after the rate-setting meeting, Bank of Japan Governor Kazuo Ueda clarified that officials are closely monitoring the state of economic affairs and are ready to act with decisive measures if inflation creeps up.  

New Record Territory

Stateside, the Federal Reserve is already making plans for 2024 and investors love it. The US central bank is gearing up for as many as three rate cuts next year. In other words, the benchmark interest rate should dive by 75 basis points from its 22-year high of 5.25% to 5.50%.  

On that note, stocks across the board received a fresh capital boost with the Dow Jones Industrial Average notching another record high. The S&P 500 is within 1% from a new all-time record, and the Nasdaq Composite is about 7% away from record territory.Â