The JPY has faced significant downward pressure, reaching 40-year lows against the USD, leading to increased speculation regarding government intervention. However, cooling US Fed rate-hike expectations following soft employment data have provided temporary relief for the pair.
Key Takeaways
- 1.Market participants are increasingly concerned about potential Japanese government foreign exchange intervention as the Yen weakened to levels not seen in 40 years.
- 2.The Japanese government's 'Honebuto' policy draft, which emphasizes the importance of monetary policy for a strong economy, contributed to recent yen selling and rising JGB yields.
- 3.Fed Chair Kevin Warsh's recent comments indicating that inflation risks have receded have dampened expectations for imminent US rate hikes.
Table of Contents
- Week in review
- Honebuto policy draft drives yen selling
- Signs of a shift in the government's response
- Fed rate-hike expectations recede for now
- BOJ branch managers' meeting may confirm Tankan tone
- Forecast range
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Authors
Teppei Ino
Securities
USDJPYNikkei Average
Themes
FX Intervention RiskMonetary Policy Divergence
Regions
Asia PacificNorth AmericaJapanUnited States