Japanese Yen: BoJ tightening expectations lift JPY against US Dollar – Scotiabank

Scotiabank strategists Shaun Osborne and Eric Theoret highlight USD/JPY trading near 155.65 with the Japanese Yen (JPY) outperforming G10 peers as markets price in a Bank of Japan (BoJ) hike alongside elevated domestic risk around CPI and policy decisions. The shift from FX intervention to a more fundamentally driven approach leaves the policy outlook JPY-supportive, with key support at 153/152 and upside focus now at 158 after breaking 155.

Policy repricing favors Japanese Yen

"The JPY is strong, up 0.4% vs. the USD and outperforming all of the G10 currencies (along with SEK) into Thursday’s NA session. Fundamental releases have been limited but near-term domestic risk is elevated into the 7:30pm ET CPI release and the BoJ policy decision that is expected to follow shortly thereafter."

"Markets have moved quickly to price in a BoJ hike over the past few weeks, reflecting a meaningful shift in the govt/BoJ approach to official currency management as officials moved from intervention to a more fundamentally-driven approach."

"The outlook for relative central bank policy remains JPY-supportive as markets move to price in a more aggressive tightening path for the BoJ."

"For USD/JPY, we continue to highlight support at 153 and 152 and have shifted our upside focus to 158 following the latest break of 155."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)