USD/JPY Range-Bound as BOJ Signals Caution
The USD/JPY currency pair has surged to its 200-day moving average at 158.49 due to broad dollar strength, but is expected to remain within a range of 155.00-160.00 in the near term.
Brown Brothers Harriman's Elias Haddad notes that Japan's Q3 Tankan survey and the Bank of Japan's (BOJ) Summary of Opinions suggest a high bar for faster tightening, limiting upside for the Japanese yen.
The Q3 Tankan all industries business conditions index improved to a 35-year high of 21, but businesses expect it to ease to 15 in Q4 and inflation expectations were broadly steady.
The BOJ's Summary of Opinions was hawkish on direction but generally cautious on pace, with the Cabinet Office urging policymakers 'to examine carefully the cumulative effects of past policy interest rate hikes', adding resistance to a faster hiking cycle.