Forex
Home›Forex›Major Pairs›USD/JPY holds just below a multi-decade high amid BoJ…
USD/JPY holds just below a multi-decade high amid BoJ repricing
BBH expects room for higher Bank of Japan rate expectations, with markets pricing about 60 bps of tightening over the next 12 months and the next-week BoJ held at 1.00%.
USD/JPY is consolidating just below a multi-decade high as Japan’s private sector growth strengthens and inflation data runs below Bank of Japan forecasts, according to FXStreet citing Brown Brothers Harriman strategist Elias Haddad.
BBH said Japan’s private sector growth has moved to a five-month high in July, and that the composite PMI rose to 53.1 from 52.8 in June, led by the sharpest manufacturing production increase since February 2014, while services growth was softer.
On inflation, FXStreet noted that Japan’s June CPI broadly matched expectations, with headline CPI up 1.7% year over year versus 1.5% in May, supported in part by government energy subsidies. Core inflation measures also remained in a relatively tight range, including core CPI ex fresh food at 1.6% year over year.
Looking ahead, markets expect the BoJ to keep rates at 1.00% next week, while BBH pointed to swap pricing that reflects roughly 25 bps of additional tightening by year-end and about 60 bps of tightening over the following 12 months, which would support higher JPY rate expectations.
Latest closeUSD/JPY 163.84 ▲0.4%