Yield spreads look important for the USD/JPY outlook. FX market intervention could be back on the horizon very soon as the Japanese Yen (JPY) is weak, weighing on consumer confidence, Rabobank FX strategists note.
JPY weakness is inflationary
“Yield spreads are clearly at the heart of the outlook for USD/JPY. Today’s downward revision to Japan’s June PMI survey has only added to the difficulty facing BoJ hawks.”
“That said, JPY weakness is inflationary and is weighing on consumer confidence, which will increase the willingness of monetary policymakers to stabilise the currency. Intervention in the foreign exchange market could be on the horizon again very soon. However, in the absence of better Japanese economic data, the JPY remains highly vulnerable.”
“We have revised our USD/JPY forecasts higher and see little scope for a sustained recovery of the JPY below 160 in the coming weeks.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
