USD/JPY decline ahead of Bank of Japan meeting, downside beyond meeting is uncertain

Westpac is looking for a lower USD/JPY into next week’s Bank of Japan meeting:

  • decisive Fed pivot to rate cuts has pretty comprehensively undercut near term USD prospects.
  • the long awaited big turn in the USD, we still think it is going to take time to develop
  • Heightened sensitivity to another BoJ YCC tweak next week and probable further groundwork for an end to the negative policy rate in 2024H1 can see USD/JPY trade lower still near term.
  • If history is any guide, USD/JPY will trade heavily into next week’s BoJ. That said, markets have been underwhelmed with almost every policy tweak so far and Ueda has downplayed each adjustment with a dovish narrative, so further material USD/JPY downside beyond next week’s meeting is not assured.

This article was written by Eamonn Sheridan at Source