USD / JPY remains confined to a tight range. Kit Juckes, Global FX Chief Strategist at Société Générale, expects the pair to rise above the 112 level.
Key statements:
“The USD / JPY, in 2021, has again closely followed interest rate differentials, particularly the rate differential on 2-year bonds. At least, that’s a warning that if the Fed succeeds in escaping the zero rate cap (and Japan is not), USD / JPY could be in for a bullish break. “
“At the very least (and this is not comfortable for my emotional bias to the yen), if the market wins rather than loses conviction in a Fed rate hike in late 2022 or early 2023, then the USD / JPY is going to have trouble getting back below 108 at any time and in due course, it will enter a course to break above 112.”
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