The USD/JPY pair has shown a seasonal tendency to weaken on days when US CPI is released, especially after soft inflation surprises. A historical average return of -0.14% on CPI day reflects the market’s sensitivity to disinflation. With the next release set for April 10, traders are watching closely. A lower-than-expected print could reinforce bets on Fed rate cuts and push the yen higher.
Right now the market has been seeing USD seasonal strength to start the year due to some tax-related flows from US corporations(as tends to happen most years). The data out this week for the US has been mixed and the NFP print will be crucial in setting the tone for the USD to end the first week of 2024.
The 150 region on the USDJPY has seen intervention from Japan's Ministry of Finance in the recent past. Remember that the move higher in US yields, recently supported by a strong US retail sales print, also supports the dollar yen.
Early Friday morning the BoJ meet and speculation is rising on whether they will start to signal the end of negative interest rates. A weak yen is creating problems for the domestic markets and raising interest rates would be a quick way to strengthen the Yen.
The rise in US Treasuries on thoughts the Fed may need to be more restrictive on rates has been nudging the USDJPY pair higher over August. Look at the relationship between US 10 year yields and the USDJPY overlay on…
Around 4am UK time on Friday this week the Bank of Japan meet and will decide on their monetary policy for the coming month. Speculation has been constantly surrounding the BoJ this year regarding whether they will exit their ultra…
The Bank of Japan is concerned about the continued weakness of the Yen as it increases costs for Japan’s domestic market. This concern ultimately led to an intervention in the Yen around the end of September which sent the USDJPY…
The JPY tends to strengthen around the summer and you can see that bias play out in the USDJPY pair. Over the last 22 years the USDJPY has fallen 14 times between July 27 and August 27. The average fall…
The BoJ has been expected to end their yield curve control for some time now as one of the only central banks to still maintain a very loose monetary policy. The SNB acted last week and surprised both Short Term…
Expectations are for the Fed to hike by 50bps at their meeting next week and then to signal another 50 bps hike. Jerome Powell has said that the neutral rates (at 2.4%) is the right level for rates by year…
