The dollar/yen exchange rate was flat in the low ¥159 range at 3 p.m. Dollar buying briefly accelerated after the BOJ deputy governor's remarks, but price action ultimately lacked clear direction.
As of 3 p.m., the dollar/yen exchange rate was trading in the low ¥159 range, virtually unchanged from late in the previous day's New York session. During 2 p.m. trading, the dollar initially edged lower through the morning before dollar buying and yen selling strengthened after the BOJ deputy governor's remarks, pushing the rate temporarily close to ¥159.39.
The BOJ deputy governor said that it was necessary to pay greater attention than before to the risk of upside surprises in prices, but did not refer to any specific timing for a rate hike. Views emerged that market pricing was approaching a consensus for a September hike.
The afternoon press conference also provided no specific indication regarding September, but expectations for a September rate hike remained strong, with market participants continuing to believe that "a September hike is highly likely." At the same time, some said it remained unclear whether the BOJ could continue raising rates steadily.
Overall, the market reaction to the BOJ's outlook and policy operation was limited. While pricing for a September rate hike increased, it did not amount to clear grounds for a shift toward yen appreciation.