In the opinion of economists HSBCit is likely that the pair USD/JPY remains highly volatile in the short term.
Monetary policy tightening is slightly supportive of the JPY
Despite the new (and unconventional) political language around the yield curve, the BoJ has indeed raised the limit for the 10-year JGB from 50 basis points to 100 basis points. In fact, it can be argued that compared to simply widening the spread to +/-100 basis points, the spread is now actually -50 basis points to +100 basis points, reflecting an asymmetry that is slightly favorable to the yen.
We doubt this is the end of the high volatility in USD/JPY in the short term. The disappointing lack of revision of its inflation forecasts for the years 2024 and 2025 suggests that the BoJ remains unconvinced that inflation can be held above 2%. In other words, this does not provide any new information about the Bank of Japan’s thinking. The BoJ’s verbal communication could remain subdued.
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.
