Forex
BoJ Guidance Crucial for Yen's Next Move Against USD
The Japanese Yen has continued its upward trend against the US Dollar, pushing USD/JPY near recent lows despite firmer Fed hike pricing and higher US front-end yields.
According to OCBC strategist Christopher Wong, markets are positioned for a 25bp Bank of Japan (BoJ) hike, with speculative positioning now net long JPY.
The yen's strength is largely driven by expectations of the BoJ's actions, rather than changes in US interest rates.
Wong notes that the BoJ's message and guidance are crucial for further gains against the USD, and that a sufficiently hawkish stance could lead to further downside in USD/JPY.