EUR/JPY draws some sellers below 161.00 as nasty BoJ Ueda remarks boost JPY

• EUR/JPY is trading lighter near 160.70 in the first European session on Monday, down 0.50% on the day.
• Solicitation comments from the BoJ support the JPY and limit upside for the cross.
• The ECB’s Rehn said disinflation and a weak economy supported the case for an interest rate cut in September.

EUR/JPY is trading in negative territory around 160.70 during the European session on Monday. Solicitation comments from Bank of Japan (BoJ) Governor Kazuo Ueda provide some support to the Japanese yen (JPY) and weigh on the cross. The Eurozone’s Harmonized Index of Consumer Prices (HICP) for August will take center stage on Friday.

BoJ Governor Kazuo Ueda on Friday reaffirmed his determination to raise interest rates if inflation stays on course to sustainably reach the 2 percent target. Most economists expect Japan’s central bank to raise interest rates again this year, but many see the possibility that it will happen in December rather than October, according to a Reuters poll. Growing speculation of more rate hikes from the BoJ is boosting the JPY against the euro (EUR).

On the euro front, investors are awaiting the first estimate of inflation data for August, which could provide some clues about the European Central Bank’s (ECB) interest rate decision in September. Consensus suggests inflation will ease to 2.3% y/y in August, leading to expectations that the ECB will continue to cut interest rates for the rest of the year. This in turn puts some selling pressure on the shared currency.

Olli Rehn, a member of the ECB’s Governing Council, said on Friday that slowing inflation, along with weakness in the eurozone economy, strengthened the case for reducing borrowing costs next month.