Yen Strength Builds Ahead of BoJ Decision
Scotiabank strategists Shaun Osborne and Eric Theoret point out that the Japanese Yen is experiencing strength against the US Dollar, with the USD/JPY rate approaching key support levels near 153 and the 2026 low around 152.
Osborne and Theoret note that markets have fully priced in a 25 basis point Bank of Japan (BoJ) hike on September 18, but they see risks tilted to further Yen gains as positioning becomes increasingly offside.
The strategists observe that the JPY has been outperforming with a modest 0.2% gain and is ignoring the implications of rising oil prices for the terms of trade.
They caution that markets are currently positioned in favor of the Yen, which could lead to further gains if the BoJ decision on September 18 aligns with market expectations.