USD/JPY steadies near 154.00 due to uncertainty over BoJ rate hike path

• USD/JPY maintains its position near an eight-month high of 154.49.

• BoJ’s Nakagawa said the central bank will proceed cautiously with policy decisions.

• US Dollar may find support as Senate moves forward with government funding bill to end shutdown.

USD/JPY holds gains near an eight-month high of 154.49, which was recorded on November 4, trading around 153.90 during the Asian hours on Monday. The pair appreciates as the Japanese Yen (JPY) struggles amid the uncertain Bank of Japan (BoJ) policy outlook.

BoJ board member Junko Nakagawa said Monday that the central bank will make policy decisions carefully, considering the continued uncertainty surrounding global trade policies. Nakagawa noted that Japanese corporate profits may weaken due to tariff effects but are expected to recover as overseas economies rebound and domestic consumption rises on stronger real wages. She added that medium- to long-term inflation expectations are gradually moving toward the BoJ’s 2% target.

The BoJ’s Summary of Opinions from the October monetary policy meeting indicated that the uncertainty remains over the central bank’s outlook, but Japan will see the environment fall into place to adjust the policy rate depending on the economic, price outlook. The BoJ could consider adjusting its policy if global economic and market conditions remain stable and the central bank confirms that firms will continue their active wage-setting behavior.

The US Dollar (USD) could receive support as the US Senate advances a government funding bill to end the shutdown, moving it closer toward passage by voting 60-40 in first approval on extending the enhanced Affordable Care Act subsidies. The amended proposal would still have to be passed by the House of Representatives and sent to President Donald Trump for his signature, a process that could take several days, according to Reuters.