The USD/JPY pair has shot up towards 148.00 ahead of the Bank of Japan’s latest monetary policy update next week. MUFG Bank economists analyze the outlook for the pair.
Will BOJ Governor Ueda manage to counteract the weakness of the Yen by talking about the risks of a rate hike?
Market attention will now turn to Governor Ueda’s comments at this week’s monetary policy meeting to see what message he conveys about the future rate hike schedule and what level of concern he shows over the recent weakness of the Yen.
If BOJ Governor Ueda backs away from giving a firm signal on the possibility of rate hikes by the end of the year, it will increase the burden on the Japanese government to support the yen through intervention as at the end of last year if USD/JPY jumps back above the 150.00 level and moves to retest last year’s high at 151.95.
Source: Fx Street
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