USD/JPY climbs above 131.80 as anxiety soars ahead of BoJ Governor nominations

• USD/JPY has strongly surpassed 131.50 amid fresh concerns about further interest rate hike from the Fed.
• Fed Waller considers the US labor market extremely robust and believes that it could fuel consumer spending ahead.
• Investors are getting anxious ahead of the release of the contenders' list for BoJ Kuroda’s successor.

The USD/JPY pair has accelerated above the critical resistance of  131.80 in the Tokyo session. The asset has displayed significnat gains as investors are getting anxious ahead of the release of the contenders' list for the successor of Bank of Japan (BoJ) Governor Haruhiko Kuroda. BoJ’s Kuroda has been maintaining an ultra-loose monetary policy for a prolonged period and the Japanese administration wants to make plans for an exit from the expansionary policy with the successor.

The statement from US President Joe Biden that the United States will not witness recession in 2023 and 2024 has infused some strength into the risk-sensitive assets. S&P500 futures are demonstrating some gains in the Asian session after a bearish Wednesday, portraying a minor improvement in the risk appetite of investors.

The US Dollar Index (DXY) is struggling to sustain above 103.00 despite Federal Reserve (Fed) chair Jerome Powell and his teammates are stick to the plan of hiking interest rates further and keeping them steady at elevated levels for a longer period.

Commenting on interest rate guidance, Fed Governor Christopher Waller cleared that the central bank will maintain its current plan of action, which has seen eight interest rate hikes since March 2022, as reported by CNBC. Regarding the labor market, the Fed policymaker considers it extremely robust and believes that it could fuel consumer spending ahead.

On the Japanese Yen front, investors are keenly focused on the list of contenders for the novel BoJ Governor. Japanese Prime Minister Fumio Kishida said on Wednesday, “In process of choosing the next Bank of Japan (BoJ) Governor nominee, they are mindful of very strong market attention on the decision.”

Meanwhile, a note from OCBC states “Focus this week will be on the list of BoJ nominees that is likely to be presented to parliament on 10 February though there are reports suggesting a delay to next week. Amamiya’s appointment would be most supportive for the USD/JPY upside while Yamaguchi’s appointment could weigh down the Japanese Yen.