The MUFG FX Daily Snapshot reports that JPY and GBP are under pressure from domestic fiscal and political risks, respectively, while the USD remains strong due to hawkish Fed expectations.
Key Takeaways
- 1.The Japanese yen faces significant downside risks due to a combination of energy price shocks and emerging fiscal concerns regarding a potential supplementary budget.
- 2.The US dollar is strengthening as markets price in a higher probability of Fed rate hikes in response to stagflationary threats from high energy prices.
- 3.UK political uncertainty, specifically a potential leadership challenge within the Labour party by Andy Burnham, is weighing on the pound and gilts.
Table of Contents
- USD/JPY: JGB & JPY sell-offs reinforced by supplementary budget
- FISCAL CONERNS RE-EMERGE AS A HEADWIND FOR JPY PERFORMANCE
- GBP: UK political developments reinforcing downside risks for gilts & pound
- KEY RELEASES AND EVENTS
- CERTIFICATION
- LEGAL ENTITIES AND BRANCHES
- GENERAL DISCLAIMERS
- COUNTRY AND REGION SPECIFIC DISCLAIMERS
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Authors
Lee Hardman
Securities
USDJPYJapan Government 30-Year Bond2-year US TreasuryMSCI ACWI global equity indexGBPCHF
Themes
Stagflation risks from energy shocksFiscal sustainability vs Monetary policy in JapanUK political leadership uncertainty
Regions
Asia PacificNorth AmericaUKJapanUnited StatesUnited Kingdom