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- JPY: Surprise, surprise! – Rabobank
JPY: Surprise, surprise! – Rabobank
More often than not, central banks have little to gain by shocking markets. That said, on occasion, the element of surprise can be a useful policy tool, Rabobank’s senior FX strategist Jane Foley notes.
USD/JPY bears push to test 145
“Earlier this year, the SNB took full advantage of an unprepared market by cutting rates to undermine the value of the CHF after Swiss CPI inflation fell back to the central bank’s target. This week the hawkishness of the BoJ has led to the market re-evaluating its expectations about its monetary policy outlook through to the end of this year and beyond.”
“This reappraisal has had a significant impact on the value of the Japanese Yen (JPY). In the coming sessions key Japanese economic data releases could either vindicate or undermine the hawkish signals provided by the BoJ. This week’s coincident surge in market expectations about the number of Fed rate cuts before the end of this year has added to the downside pressure on USD/JPY.”
“Our medium-term target is USD/JPY145. This week’s moves suggest that this level may be hit far sooner than we had expected. Dependent on the outcome of next week’s key Japanese economic data, we will be re-evaluating our USD/JPY forecasts.”
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