The Japanese yen strengthened against other major currencies in the Asian session on Wednesday, after the Bank of Japan policymaker Junko Nagakawa signaled about on potential interest rate hikes.
The BoJ board member Nagakawa stated that the central bank may adjust the extent of its monetary easing if the economy and prices align with its projections.
When considering adjusting the degree of monetary easing further, we must look back upon market developments after our policy shift in July, and carefully assess how the markets changes affect our economy and price outlook, she said.
Asian stocks traded lower, with Chinese, Hong Kong and Japanese markets leading regional declines as worries persisted about the health of the Chinese economy.
The focus now shifts to the U.S. consumer price inflation reading later in the day that could offer fresh insights into the central banks interest rate plans.
There is fair amount of uncertainty around the size of the cut at next weeks Federal Reserve meeting. Markets are pricing in one out of three chances of a 50-basis point cut and anticipate 114 bps of easing this year.
In the Asian trading today, the yen rose to nearly a 9-month high of 140.72 against the U.S. dollar and nearly a 5-week high of 184.48 against the pound, from yesterdays closing quotes of 142.23 and 186.28, respectively. The yen may test resistance around 138.00 against the greenback and 179.00 against the pound.
Against the euro and the Swiss franc, the yen advanced to more than 5-week highs of 155.50 and 167.04 from Tuesdays closing quotes of 156.94 and 168.16, respectively. If the yen extends its uptrend, it is likely to find resistance around 153.00 against the euro and 165.00 against the franc.
The yen climbed to a 5-week high of 86.47 against the NZ dollar, from Tuesdays closing value of 87.57. On the upside, 83.00 is seen as the next resistance level for the yen.
Against the Australia and the Canadian dollars, the yen jumped to more than 5-week highs of 93.65 and 103.50 from Tuesdays closing quotes of 94.77 and 104.64, respectively. The next possible upside target for the yen is seen around 90.00 against the aussie and 101.00 against the loonie.
Looking ahead, U.S. CPI data for August and U.S. EIA crude oil data are slated for release in the New York session.