We have previously cited rate differentials pointing to higher dollar-yen, not today. The recent USD/JPY upside could be seen speculative from a rate spread perspective, the 2yr UST premium over JGB stands at 440bps
Coincidentally, the UST-JGB differential peaked early in May when Japanese authorities decided to intervene in FX. While the spread is not back to YTD lows, it has been trending lower for the last couple of months
From this view, there is no strong justification of a yen reversal, but it makes the USD/JPY breach of 160.0 a bit premature. However, a BoJ rate hike would not take the spread significantly lower either, I would be cautious of following a spike higher like the one we saw at the end of April
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