JPY/$ and interest rates: What will happen?

The “Failed” Intervention? As the short sellers piled enormous short positions on USDJPY, markets were awaiting the Ministry Of Finance (MOF), Japan, to intervene in the FX markets to support the falling JPY. However, there was no sign of any intervention until 15 minutes ago when USDJPY suddenly fell 1.5% in just a minute. Has the USDJPY peaked, or will the markets test the BoJ's/MOF's resolve to defend 157 levels? Remember, Japan goes on a seven-day holiday next week, and we'll get the PCE numbers in the next few hours. Edit: There was likely no intervention and JPY plummeted to 158.3 and is now at the danger level of 160. Only rate hikes or a dovish Fed can stop the fall now. Chart: Tradingview

158… check! In the final hours of New York, USD/JPY passed 158 in a swing higher! The lines in the sand kept shifting on Friday as the market kept testing all critical levels post the BoJ meeting. The question the market has, will we see 160? The next high price from 1990 is at 160.4. And how are the yen crosses doing? - EUR/JPY: ~169.2, its highest level since July 2008 (2008 high is at ~169.96) - GBP/JPY: ~197.7, its highest level since 2008. - AUD/JPY: ~103.4, its highest level since April 2013. - NZD/JPY: ~94, its highest level since July 2007 - CADJPY: ~115.8, its highest level since December 2007. - CHF/JPY: ~173.1, its highest level ever (at least going back to 1973). Another pressing question the market has - what about intervention? Well, as history suggests, it only helps when fundamentals are improving, and Japan has shed some light on this earlier last week which allowed the market to test above 155 on Wednesday. Let’s not forget, the dollar side of the equation is also applying pressure with inflation fears, rate cuts pared back, and more, which is driving the dollar bid! We have the FOMC this Wednesday so all eyes will be watching on what evolves! We shall see what limits get tested this week in both FX and rates! #macro #fx #rates #economy #markets #dollar #yen #finance #yields #japan

The JPY to USD carry trade continues to be one of the most attractive trades in 2024, considering the expected return and risk. In fact, while FED funds futures discount two rate cuts by the end of the year, the BOJ has no forward guidance on a possible hiking cycle. The differential between US and Japanese rates should therefore remain around 5% until the beginning of 2025.

Fewer Fed rate cuts bets and expected Trump's policies continue to support the USD. US Initial jobless claims slightly declined. Japan’s CPI came in higher than expected at 3%. For USDINR, 85.12 acts as a support while 85.35 a resistance. #usdinr #rupee #dollarindex #dxy #fx #forex #currency #inflation #growth #bonds #yields #equities #globalmarkets #federalreserve #fed #brentcrude #oil

160 has been breached earlier this morning! While Japan’s markets are closed, a few factors can be attributed: 1) stops triggered (160 is a psych level) 2) barrier option triggers (~160) 3) thin liquidity All other yen crosses have followed through as well with multi-decade highs. All lines of sand have been wiped by the market - so the next question the market has, where is the ‘one and only’ line of sand? What’s the maximum the market can push through higher before the MoF steps into the market? #macro #yen #japan #fx

With a Federal Reserve (Fed) meeting, a Bank of Japan (BOJ) meeting, two very important inflation reports. So, what should bond investors do during this period of heightened volatility? Keep calm and clip bond coupons. https://hubs.la/Q02CtsXn0

FX Daily: Trive’s Week Ahead Insights: Stay informed with our detailed analysis and projections. Check out the latest trends and key levels in today's report. The GBP continue supported by the BoE’s gradual rate cuts and optimistic economic outlook. Higher UK yields and stronger GDP growth forecasts make GBP attractive, particularly against low-yield currencies Meanwhile, JPY faces bearish pressures due to BoJ’s cautious stance and Japan’s political uncertainty, with no major policy changes expected soon. Read the full article: https://lnkd.in/gT9ix2bM #TriveInternational #neverstandstill

JPY: Lines in the sand or windmills of your mind #jpy #boj #usd #fed #ust 🖋 The MoF/ BoJ have intervened in support of the JPY twice so far this week. 🖋 Market participants were quick to point out the futility of their efforts given the policy divergence between the BoJ and the Fed. 🖋 I think, however, that the intervention would be successful and that investors will take profit on their stretched JPY-shorts. 🖋 The BoJ/MoF will provide the Japanese corporates and investors with a level at which to repatriate. 🖋 The BoJ/MoF will discourage JPY-funded carry trades by reducing the risk-adjusted return on these trades. 🖋 The Fed has just announced a more aggressive QT taper and the US Treasury funding requirements came in below market expectations. 🖋 UST yields - arguably the most important driver of USD/JPY - seem to have peaked. The timing of BoJ/MoF interventions couldnt have been better. For more on that, please see my latest interview. Much thanks to Stephen Sedgwick and Karen tso for the interesting discussion. https://lnkd.in/d4S4AgH6

FX Daily: Trive’s Week Ahead Insights: Stay informed with our detailed analysis and projections. Check out the latest trends and key levels in today's report. The GBP continue supported by the BoE’s gradual rate cuts and optimistic economic outlook. Higher UK yields and stronger GDP growth forecasts make GBP attractive, particularly against low-yield currencies. Meanwhile, JPY faces bearish pressures due to BoJ’s dovish stance and Japan’s political uncertainty, with no major policy changes expected soon. Rising U.S. yields further weigh on the yen. Read the full article: https://lnkd.in/gxcSz2v2 #TriveInternational #neverstandstill

JGB yields fall, tracking US Treasury peers, yen rallies - Japanese government bond yields fell on Thursday, tracking overnight declines in U.S. Treasury yields, while investors were less cautious about an interest rate hike amid a stronger yen. The 10 - https://lnkd.in/g6J-vP9V