The Forex market has moved on Monday with the dollar strengthening against the Japanese yen, following statements by the Governor of the Bank of Japan, Kazuo Ueda.

In a speech that left open the possibility of a policy adjustment in the near future, Ueda reiterated that interest rates will rise gradually if the economy develops according to the central bank's forecasts.

However, he did not specify whether a hike would happen in December, leaving markets with a 54% chance of a quarter-point increase at the next meeting on Dec. 19.

Impact on the Forex Market and the Strength of the Dollar

The dollar rose 0.6% against the yen to 155.09, off a low of 153.86 hit on Friday. The move came after Japanese Finance Minister Katsunobu Kato warned of possible interventions if the yen depreciates too much.

The dollar index, which measures the dollar's performance against a basket of currencies, was steady at 106.66, nearing a one-year high of 107.07 hit on Friday. This strength is tied to a 70 basis point rise in 10-year Treasury bond yields since October, which has fueled a 5.4% appreciation in the dollar index.

Trump's global economic and political outlook

Donald Trump's election victory in the United States has raised expectations of tariff policies that could benefit the dollar. According to Jonas Goltermann, an economist at Capital Economics, the dollar could gain an additional 5% by the end of 2025, driven by the "economic exceptionalism" of the US compared to its main peers.

Meanwhile, markets are awaiting clarity on who will be Trump's next Treasury secretary, with names like Howard Lutnick and Scott Bessent among the possible candidates. Analysts predict that Trump's policies, including tariffs, debt-financed tax cuts and immigration relief, could be inflationary, limiting the chances of aggressive cuts by the Federal Reserve.

In contrast, other central banks, such as the European Central Bank, could adopt a more cautious tone due to weak economic data and tariff risks.

Key data on the horizon

This week, Forex market analysts will be keeping an eye on inflation reports from the UK, Japan and Canada, as well as manufacturing surveys that will reflect the impact following the US elections.

Volatility in the Forex market remains a key factor, with the dollar showing sustained strength amid shifts in global policies and economic expectations. Traders will need to pay close attention to upcoming statements from Fed and Bank of Japan officials to adjust their strategies.