FX Focus - 15 November 2023

USD/JPY Macro Update

  • By Lee Hardman
  • Nov 15, 2023
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USD/JPY Macro Update

  • JPY weakness is creating more domestic concern
  • JPY shorts remain popular amongst speculators
  • Broad-based USD rebound helps to lift USD/JPY
  • Strong US economy encouraged higher US yields & USD
  • BoJ is gradually phasing out Yield Curve Control
  • BoJ didn’t want to buy more JGB to keep yields below 1.0%
  • Inflation expectations continue to increase in Japan 
  • Stronger wage growth to trigger BoJ to tighten policy
  • BoJ is moving closer to ending negative rate policy
  • Fed’s rate hike cycle ended back in July
  • US labour demand is weakening 
  • US wage growth is slowing
  • US unemployment rate is rising gradually
  • US inflation has slowed more quickly than expected
  • It will become harder to justify maintaining Fed’s restrictive policy stance 
  • Deeply undervalued JPY to rebound
  • Lower rates in 2024

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