The market was caught off guard in Tokyo trade on a report that Amamiya had turned down the role as BOJ Governor and that 71-year-old Kazuo Ueda was going to get the job.
Ueda wasn't even on the long list of names people were speculating about, he wasn't even a dark horse.
The immediate reaction was a hawkish one with USD/JPY tumbling. Since then, the market appears to have concluded that it doesn't really know much about Ueda. That sentiment was hardened when he said today that BOJ policy is appropriate and that easy policy needs to continue.
Justin earlier wrote a great post on what he's said in the past. There's also this:
“From here on, with the restarting of economic activity post-Covid, there are expectations that there’ll be a stronger demand-inducing effect from the weaker yen. On the other hand, globally there’s likely to be a slowdown of inflation and economic growth. We should view the path toward achieving sustainable 2% inflation in Japan as still a long one.”
At some point the BOJ will have to exit YCC but naming Ueda as BOJ Governor isn't a clear cut signal that it's coming. That's why USD/JPY has completed the round trip today.
