The Japanese yen surged 1.5% against the dollar (USD/JPY) on Thursday, its biggest one-day jump since January, as Tokyo showed signs it may finally end years of ultra-low interest rates.
Bank of Japan Governor Kazuo Ueda said policy management would “become even more challenging” heading into 2023, flagging “several options” for what could come next at the December 19 meeting. Markets are now pricing in a 40% chance of a shift.
The speculation halted a recent rise in global stocks and bonds. Asian shares excluding Japan fell 1.2%, while Japan’s Nikkei closed down 2.5% in its sharpest drop since October. Meanwhile, 10-year JGB yields jumped 11.5 basis points in their worst day in six weeks.
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Traders are now eyeing key U.S. jobs data out later today and on Friday for further clues on the Fed’s rate hike path. Private payrolls rose less than expected in November, the latest sign of a cooling American labour market.
