Japanese Yen: Sharp rebound and Fed repricing – MUFG
MUFG’s Michael Wan highlights a sharp strengthening in the Japanese Yen, with USD/JPY dropping from 160 to around 155.30 as the Dollar broadly weakened and Asian FX gained.
The Japanese Yen experienced a significant rebound, with USD/JPY dropping from 160 to around 155.30, marking a 5 big figure move. This strengthening came as the US Dollar generally weakened and Asian currencies gained strength. Bank of Japan's hawkish rhetoric fueled the Yen's rise, but there were no clear signs of intervention.
BOJ Board Member Takata, a prominent hawk, hinted at a potential interest rate increase at the upcoming BOJ meeting. This fueled a small chance of a 25bps hike in the September meeting. Experts believe Fed rate expectations are overly optimistic, particularly after the Jackson Hole meeting, and the Dollar should weaken over time.
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