ING: USD/JPY
September proved a wild month for USD/JPY, where runaway yen optimism briefly saw 153, before a hawkish Fed and a dovish Bank of Japan hike sent it back to 158. What we’ve learned this year is that Japan and the US are uncomfortable with the pair above 160. But a move to 150 requires less hawkishness from the Fed and a much higher policy rate in Japan. That may not emerge until 2Q27. Domestically, growth is picking up in Japan, but we doubt the BoJ is ready to accelerate its tightening cycle. We think the next hike (to 1.50%) comes in January, or slightly earlier on 18 December. 30 October is a big date for USD/JPY. No BoJ hike and no news of GPIF fund re-allocation to Japan could weigh heavily on the yen.
September proved a wild month for USD/JPY, where runaway yen optimism briefly saw 153, before a hawkish Fed and a dovish Bank of Japan hike sent it back to 158. What we’ve learned this year is that Japan and the US are uncomfortable with the pair above 160. But a move to 150 requires less hawkishness from the Fed and a much higher policy rate in Japan. That may not emerge until 2Q27.
Domestically, growth is picking up in Japan, but we doubt the BoJ is ready to accelerate its tightening cycle. 50%) comes in January, or slightly earlier on 18 December. 30 October is a big date for USD/JPY. No BoJ hike and no news of GPIF fund re-allocation to Japan could weigh heavily on the yen.