ANY BIG HAWKISH SURPRISE FROM FED CHAIR POWELL COULD PUSH USD/JPY BEYOND ITS 2022 HIGH AT 151.90 – TDS

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USD/JPY traded back above 150.00 after the BoJ exited its Negative Interest Rate Policy (NIRP). Economists at TD Securities analyze the pair’s outlook.

BoJ exited NIRP and YCC simultaneously

BoJ exited NIRP and YCC simultaneously and revamped its monetary policy framework around short-term interest rates. The Bank kept its QE program and signalled that it will make nimble responses to any spike in long-run interest rates. Our confidence around an October hike has lessened after Governor Ueda's dovish comments and the recent economic data.

USD/JPY is now hostage to the FOMC decision on Wednesday and any big hawkish surprise from Powell could push USD/JPY beyond its 2022 high at 151.90 which may invoke some strong verbal interventions from the MoF.

 


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