The yen falls close to a low against the euro, while the BOJ maintains a cautious tone after a rate hike

The yen languished near a record low against the euro on Monday after Bank of Japan Governor Kazuo Ueda stuck to his usual cautious rhetoric following a rate hike on Friday. The Japanese currency was trading near an 11-month low against the US dollar and just below a 17-month low against the Australian currency.

A warning of a possible currency intervention on Monday had little immediate effect on the market. Japan’s top currency diplomat, Atsushi Mimura, said he was “concerned” about “one-sided and sharp” exchange rate moves, and warned that officials will “take appropriate action against excessive moves.”The BOJ on Friday raised the key rate by a quarter of a percentage point to a three-decade peak of 0.75%, in a clearly telegraphed move. The accompanying statement signaled a willingness to continue tightening policies, but Ueda stressed at his press conference that the timing and pace of further rate hikes depend on incoming economic data.

The absence of any hawkish hints sent the yen tumbling 1.3% against the euro, 1.4% against the dollar and 1.5% against the Australian, even as it triggered a broad sell-off in Japanese government bonds, pushing the 10-year yield – which moves opposite to the price – past the symbolic 2% mark to the highest level since 1999.

“While the BOJ statement noted that real interest rates remain ‘significantly low’ – potentially a sign of further tightening ahead – Governor Ueda’s press conference offered few new insights, reiterating a data-dependent approach,” Tony Sycamore, an analyst at IG, wrote in a client note.

“The lack of clearer guidance on the pace of future rate hikes disappointed markets, triggering yen selling.” A decisive break above 158 yen per U.S. dollar would open the way to a yearly high from January around 158.87, he said.

The US dollar fell 0.1% to 157.56 yen on Monday, but remained close to last month’s high of 157.90.

The euro fell ⁠0.1% to 184.51 yen, staying within striking distance of Friday’s record peak of 184.75. The common currency remained stable at $1.1714.

The Aussie weakened slightly to 104.20 yen, but was not far from the 104.39 yen mark reached earlier this month for the first time since July last year. It rose 0.1% to $0.6616.

The Aussie-yen pair “remains fundamentally supported by solid risk sentiment and, more recently, by wider interest rate spreads between Australian and Japanese 10-year government bond yields,” Commonwealth Bank of Australia analysts wrote in a client note, predicting a rise to 109 yen per Australian dollar in March.