Home›Forex›Major Pairs›Rabobank flags Fed and BoJ uncertainty for USD/JPY out…

Rabobank flags Fed and BoJ uncertainty for USD/JPY outlook

Rabobank expects USD/JPY to reach 159 in three months only if the BoJ delivers clearly hawkish signals and Fed rate-hike fears cool.

Reported · Written up by our desk · Major Pairs

Rabobank’s Senior FX Strategist Jane Foley said upcoming decisions from the Federal Reserve and the Bank of Japan could drive USD/JPY moves, citing added uncertainty from Fed Chair Warsh’s stance on forward guidance.

Foley pointed to recent yen weakness versus the US dollar, saying the BoJ’s cautious pace of hiking may not be enough to support the currency unless the BoJ turns clearly hawkish. She also noted market pricing is described as jittery on the odds of a Fed hike, even as Rabobank and economists’ surveys do not signal a policy change from the FOMC at the meeting referenced.

Foley said the BoJ’s outlook could matter more for USD/JPY in the near term because policy makers will know the Fed outcome by their meeting time. She added that an absence of hawkish signals from the BoJ could leave the door open to further upside pressure on USD/JPY.

Rabobank described its USD/JPY 159 three month target as currently optimistic, saying it would likely require multiple factors, including reassurance on Japan’s fiscal front, hawkish BoJ signals, and a decline in Fed rate hike fears. The analysis also referenced reporting that the BoJ was open to hastening the pace of rate hikes.

Latest closeUSD/JPY 163.85 ▲0.1%

More like this

Sources