Explore eFXplus Derived Data That Drive Results
A Data Partner of:
Sep 11 - 06:55 PM

Credit Agricole: BoJ's YCC Tease Fuels Speculation and Jolts the JPY

By eFXdata  —  Sep 11 - 03:00 PM

Credit Agricole discusses growing market speculation regarding a potential tweak in the Bank of Japan's (BoJ) Yield Curve Control (YCC) policy. Governor Kazuo Ueda hinted at possible adjustments, which could be as momentous as exiting the bank's negative interest rate policy by 2024. This has resulted in the Japanese Yen (JPY) becoming the best-performing G10 currency in Asia, albeit amidst mixed reactions from investors and market watchers.

Key Points:

  • Rising Speculation: Governor Ueda's comments have ignited speculation around a significant policy adjustment, possibly including the end of negative interest rates by early 2024.

  • JGB Yield Impact: The 10-year JGB (Japanese Government Bond) yield has surged to 0.70%, and the 2-year yield has also risen. However, there's no sign yet of a BoJ intervention to cap yields, as seen in the past.

  • JPY Performance: The recent movements in JGB yields have made the JPY the standout currency in the G10 group within Asia.

  • Skeptical Voices: Investors are questioning Governor Ueda's real intent, especially given the recent data showing a decline in wage growth and ongoing inflation concerns.

Trading Recommendations:

  • JPY Long Positions: Traders considering bullish positions on the JPY should closely monitor both JGB yields and upcoming U.S. CPI data. Any surprising shifts could drastically impact the JPY's value.

  • USD/JPY Outlook: Those trading USD/JPY should be alert to potential BoJ interventions, which could limit the JPY's appreciation. Given the wider yield gap between the U.S. and Japan, a falling U.S. inflation rate could make the USD less attractive against the JPY.


For Traders:
  • Yield Watch: Monitoring the BoJ's actions around the 10Y JGB yield and U.S. CPI data is crucial for trading decisions regarding the JPY.

  • Intervention Risks: The chances of a BoJ intervention to cap JGB yields or strengthen the JPY should not be discounted, and this could put a ceiling on JPY gains in the short term.

For Policymakers:
  • Communication is Key: Effective communication about any policy adjustments is vital for managing market expectations and avoiding unintended consequences, especially given the mixed interpretations of Governor Ueda's comments.


Credit Agricole highlights a buzz of market speculation surrounding potential adjustments to the BoJ's YCC policy, largely triggered by Governor Ueda's recent comments. While this has given the JPY a boost, mixed interpretations and skepticism from investors suggest a more complex picture. Traders should remain alert to these dynamics, as well as to upcoming U.S. CPI data and the potential for BoJ interventions, to navigate the opportunities and risks effectively.

Crédit Agricole Research/Market Commentary


  • eFXplus
  • End-user license agreement (EULA)


  • About
  • Contact Us


  • Terms of Service
  • Privacy Policy
  • Disclaimer
© 2023 eFXdata · All Rights Reserved