The USD/JPY pair is hovering near 159, with a likely test of 160 as the Japanese government considers a JPY 3 trillion supplementary budget that is driving up JGB yields. Market attention is shifting to Governor Ueda's upcoming speech on May 27 for signals regarding a potential June rate hike.
Key Takeaways
- 1.The USD/JPY is expected to test the 160 level if Japanese fiscal concerns intensify, specifically regarding a proposed supplementary budget.
- 2.Japan is considering a roughly JPY 3 trillion supplementary budget, which has put upward pressure on JGB yields.
- 3.The Bank of Japan (BOJ) faces increasing external pressure to raise rates, with US Treasury Secretary Bessent signaling support for policy normalization.
Table of Contents
- Week in review
- President Trump tones down calls for rate cuts
- Fiscal concerns in focus as supplementary budget considered
- Treasury Secretary Bessent urges BOJ rate hikes
- It all comes down to Governor Ueda
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Authors
Teppei Ino
Securities
USDJPYJapanese Government BondsUS Treasuries
Themes
Fiscal-Monetary Policy TensionGeopolitical Inflation Risks
Regions
Asia PacificNorth AmericaJapanUnited StatesUnited Kingdom