JPY Weekly

The USD/JPY rose as hawkish FOMC sentiment overshadowed the Bank of Japan's rate hike. Expectations of sustained US rate hikes and the reopening of the Strait of Hormuz continue to place downward pressure on the yen.

Key Takeaways

• 1.The US dollar has outperformed the yen following hawkish FOMC signals that outweighed the Bank of Japan's recent rate hike.
• 2.The BOJ raised the policy rate to 1.00%, though market communication regarding future pace remains unclear.
• 3.The US-Iran ceasefire and subsequent reopening of the Strait of Hormuz are viewed as yen-negative due to expected increases in energy import costs for Japan.

Table of Contents

• Week in review
• Fed rate-hike expectations outweigh expectations for an early additional BOJ hike
• BOJ turns hawkish, but market communication is not fully aligned
• Warsh's Fed also turns hawkish
• Reopening the Strait of Hormuz is yen-negative

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