Scotiabank strategists Shaun Osborne and Eric Theoret report that the USD/JPY rate remains stable but elevated, with recent gains already exceeding previous intervention levels. Tuesday’s 25-basis-point hike by the Bank of Japan (BoJ) is widely expected, with markets pricing in almost one more hike by December. They express concerns about communication as Governor Ueda will not be present and see narrow resistance to 162 with support in the 156-158 range.
Limited resistance apparent towards 162
“The yen’s continued weakness is a concern for market participants, government officials and central bank policymakers, raising fears of intervention by the former as the latter considers the implications for inflation.”
“The recent spot weakness (USD/JPY rally) has already cleared the levels that triggered earlier currency management actions (price controls in January, intervention in late April/early May).”
“Domestic releases have been limited and the calendar ahead of Tuesday’s BOJ rate decision is blank. A 25 basis point hike is widely expected, with markets pricing in almost one additional hike by December.”
“Governor Ueda is not present, leaving market participants somewhat concerned about the central bank’s announcement and especially the post-meeting press conference.”
“For USD/JPY, we see limited resistance between the current spot and 162 and expect support in the 156/158 range.”
(This article was created with the support of an artificial intelligence tool and has been reviewed by an editor.)
