USD/JPY backs up after plummeting from 150.15 to 147.43 on Tuesday on touted BoJ rate checking/intervention. Economists at Société Générale analyze th
USD/JPY is unlikely to retreat in a durable fashion until the bank tightens policy or the cap comes off 10y JGB yields. Or US bond yields stabilise or retreat. In short, it could get worse for the Yen before it gets better.
USD/JPY retreated from 151.95 to 135 a year ago after $43bn of USD sales, but the success was partly explained by the 50 bps drop in 2y UST yields and unexpected change in YCC settings in December. The BoJ may have checked FX rates on Tuesday with dealers, but we would not be surprised if actual selling of USD is delayed until Friday, or Monday morning during Asian trading hours, when US payrolls will have been published.
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The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.EUR/USD is recovering ground to near 1.0500 in the European session. The pair extends the rebound, as the US Dollar pulls back alongside the bond yields ahead of the top-tier US ADP jobs data and the ISM Services PMI. Mixed EU data fails to have any impact on the major. GBP/USD is building on the recovery gains above 1.2100 in the European session on Wednesday.
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