CFD Trading Rate US Dollar vs Japanese Yen (USDJPY)

The US Dollar (USD) is likely to trade in a range between 152.50 and 153.80. In the longer run, while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Chance for the advance in USD to extend to 154.00

24-HOUR VIEW: “After USD rose to 153.87 two days ago and then pulled back, we highlighted yesterday that ‘The pullback in overbought conditions suggests USD is unlikely to rise further.’ We also highlighted that USD ‘is more likely to trade in a range between 152.45 and 153.60.’ Although USD subsequently traded in a higher range of 152.74/153.86, it ended the day largely unchanged at 153.35 (+0.05%). There has been no clear increase in either downward or upward momentum. Today, we continue to expect USD to trade in a range, probably between 152.50/153.80.”

1-3 WEEKS VIEW: “Our update from yesterday (29 Oct, spot at 153.05) is still valid. As highlighted, ‘while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing.’ Overall, only a breach of 151.90 (no change in ‘strong support’ level from yesterday) would indicate that the USD advance that started early this month has ended.”

Government formation is key but this may take up to weeks or even months. Uncertainty on this front may complicate fiscal-monetary policy, and weigh on JPY in the interim. LDP coalition can either form a coalition with another smaller party such as DPP or JIP or attempt to govern with a minority government with ad-hoc cooperation on certain issues with the smaller parties. Pair was last at 153.18 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Near term retracement not ruled out

“But these parties have previously critic BoJ for raising interest rates. Alternatively, the opposition CDP leader, Noda (whom was a PM himself in 2011-12) can push to seek a coalition with other opposition parties. But it was last known that his party has had little success finding partners due to policy differences. Local news reported there may be a vote on 11 Nov on who will take premiership in a special parliamentary session. And there is now greater uncertainty if PM Ishiba will win enough votes to lead a new government as the new PM.”

“The focus is on BoJ MPC tomorrow. Consensus is for hold as policymakers may want to wait for greater clarity on government formation and economic policies before deciding on policy choice. That said, one may not want to rule out any surprises as policymakers may consider a hike tomorrow as an opportune time to tame JPY bears.”

“Bullish momentum on daily chart intact while RSI is from near overbought conditions. c. Support at 151.50 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 155 and 156.50 (76.4% fibo). Slowing BoJ policy normalisation and Fed in no hurry to cut, alongside US election risks may imply that USDJPY may well stay supported in the interim.”

• The US Dollar has resumed its upside trend and is testing mid-term highs at 153.90.
• The uncertain political and monetary scenario in Japan is hammering the Yen.
• The broader bias is positive but a bearish divergence warns of a potential correction.

The Dollar has resumed its broader bullish trend during Tuesday’s European session and is testing resistance right below 154.00 with all eyes on the US JOLTS Job Openings data.

The pair draws support from the image of a solid US economy, with all the other main economies slowing down. This endorses the idea that Fed easing will be only gradual, and keeps US Treasury yields and the USD buoyed.

In Japan, the uncertain political and monetary scenario after Sunday’s elections is weighing on the Yen. The Bank of Japan meets this week and is widely expected to keep interest rates on hold until the political context is clarified.

In the calendar today US Consumer confidence is expected to have improved in October, while the JOLTS Job Openings are seen declining moderately yet at levels consistent with a healthy labour market.

From a technical perspective, the bullish bias remains intact but the RSI shows a bearish divergence, warning that a correction might be ahead. Resistances are 153.90 and 155.10. Supports lie at 152.50 and 151.60.

USD/JPY remains better bid, following LDP’s first loss in more than a decade. USDJPY was last seen at 153.47 levels, OCBC’s FX analyst Frances Cheung and Christopher Wong note.

Near term retracement not ruled out

“The coalition needs to find partners now and this may take a while. A hung parliament means that LDP coalition may face challenges passing policies in parliament. Uncertainty may complicate fiscalmonetary policy, and weigh on JPY in the interim. BoJ meeting (Thu) is likely a non-event as Japanese policymakers are likely to hold off rate increases until there is greater clarity with government formation and economic policies.”

“That said, one should not rule out any surprises. Slowing BoJ policy normalisation and Fed in no hurry to cut, alongside US election risks may imply that USDJPY may well stay supported in the interim. For USDJPY, the 9% move higher over the last month may have look excessively stretched.”

“Bullish momentum on daily chart intact while RSI shows signs of falling from near overbought conditions. Near term retracement not ruled out. Support at 151.50 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). Resistance at 155 and 156.50 (76.4% fibo).”

The US Dollar (USD) is likely to trade in a range between 152.45 and 153.60. In the longer run, while conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Conditions are severely overbought

24-HOUR VIEW: “We expected USD to ‘rise above the major resistance at 153.40’ yesterday. However, we pointed out that ‘the major resistance at 154.00 is likely out of reach.’ Our view was not wrong, as USD rose to 153.87, pulling back to close at 153.28 (+0.64%). The pullback in overbought in overbought conditions suggests USD is unlikely to rise further. Today, USD is more likely to trade in a range between 152.45 and 153.60.”

1-3 WEEKS VIEW: “We have expected a higher USD since early this month. As we tracked the advance, in our most recent narrative from last Thursday (24 Oct, spot at 152.60), we indicated that ‘upward momentum remains strong, and the next level to monitor is 153.40, followed by 154.00.’ Yesterday, USD broke above 153.40, reaching a high of 153.87. While conditions are severely overbought, there is a chance for the advance in USD to extend to 154.00 before pausing. On the downside, a breach of 151.90 (‘strong support’ level previously at 151.50) would indicate that USD is not strengthening further.”

• USD/JPY loses ground to near 152.95 in Tuesday’s early Asian session, down 0.22% on the day. 
• Political and monetary policy uncertainty in Japan weighs on the Japanese Yen. 
• The prospect of less aggressive policy easing by the Fed might help limit the USD’s losses. 

The USD/JPY pair loses ground to around 152.95 during the early Asian session on Tuesday. The pair edges lower as the US Dollar (USD) retreats from a nearly three-month high in the previous session. However, the downside for the pair might be limited amid the uncertainty surrounding the next government’s makeup and the Bank of Japan's (BoJ) rate hike plan. 

An election loss by Japan's ruling coalition raises political and monetary policy uncertainty and might exert some selling pressure on the Japanese Yen (JPY). “The ruling LDP and its coalition partner lost their majority in the lower house, raising concerns about the shape and policy direction of the next government. Markets have also trimmed BoJ tightening expectations marginally (helping boost local stocks),” noted Scotiabank’s Chief FX Strategist Shaun Osborne.

The BoJ interest rate decision will take center stage on Thursday. Nearly 86% of economists polled by Reuters anticipate the Japanese central bank to leave its rates unchanged at its October meeting on Thursday. 

Elsewhere, data released by the Statistics Bureau of Japan showed on Tuesday that the country’s Unemployment Rate ticked lower to 2.4% in September, down from the previous reading and the market consensus of 2.5%. 

The bets for a less aggressive policy easing by the Federal Reserve (Fed) could provide some support to the Greenback in the near term. According to the CME FedWatch tool, traders have priced in a nearly 96.8% chance of a usual size rate cut of 25 basis points (bps) in November and expect a similar move in the December meeting.

Nonetheless, traders will keep an eye on the advanced US Gross Domestic Product (GDP) for the third quarter, the Personal Consumption Expenditure Price Index (PCE) for September, the ISM Manufacturing PMI, and the Nonfarm Payrolls (NFP) data for October, which will be released this week for fresh impetus. Any signs of weakness in the US economy or the labor market could undermine the USD against the JPY. 

• USD/JPY surrenders a majority of its intraday gains after a sharp rally in the opening session.
• The pair gives up gains as US Dollar falls back amid uncertainty ahead of US data.
• The scenario of a coalition government in Japan has diminished BoJ rate hike prospects.

The USD/JPY pair gives up the majority of its intraday gains after facing significant bids near 154.00 in Monday’s North American session. The asset showed a strong upside move in the opening session due to a sharp weakness in the Japanese Yen (JPY) but faced pressure at elevated levels as the US Dollar (USD) retreated after failing to extend rally.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, falls back after revisiting an almost three-month high of 104.60. The Greenback’s rally appears to have stalled as investors turn cautious ahead of a string of United States (US) economic data such as: JOLTS Job Openings and Personal Consumption Expenditure Price Index (PCE) for September, Q3 Gross Domestic Product (GDP), and the ISM Manufacturing PMI and the Nonfarm Payrolls (NFP) data for October, to be published this week.

The economic data will significantly influence market expectations for the Federal Reserve’s (Fed) likely interest rate action for the remaining two meetings this year. According to the CME FedWatch tool, traders have priced in a usual size rate cut of 25 basis points (bps) in November and are confident that a similar move will be performed in the December meeting.

Market participants are likely to focus more on the economic growth and labor market-related data as Fed officials are confident the inflation remains sustainably on track towards bank’s target of 2%.

Meanwhile, the outlook of the Yen has weakened as the Japanese economy is poised to run by a coalition government after the ruling Liberal Democratic Party (LDP) failed to get majority seats in the snap election. The scenario bodes poorly for forward growth as Shigeru Ishiba won’t be the only caretaker of the economy. This has also weakened hopes of more interest rate hikes from the Bank of Japan (BoJ) for this year.

The JPY slumped at the outset of trading overnight in response to the results of Japan’s elections on Sunday, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

JPY slides after LDP loses majority

“The ruling LDP and its coalition partner lost their majority in the lower house, raising concerns about the shape and policy direction of the next government. Markets have also trimmed BoJ tightening expectations marginally (helping boost local stocks).”

“USD/JPY traded through the upper 153s in early dealing before falling more than a big figure, helped by a drop in US Treasury yields and a general pullback in broader USD strength. Spot remains below our estimated fair value of 154.09 today, however.”

Potential for the US Dollar (USD) to rise to the major resistance at 153.40; the major resistance at 154.00 is likely out of reach for now. In the longer run, upward momentum remains strong; the next level to monitor is 153.40, followed by 154.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

The next level to monitor is 153.40

24-HOUR VIEW: “We expected USD to trade in a range between 151.20 and 152.55 last Friday. JPY subsequently traded in a 151.44/152.37 range, closing at 152.30. USD opened on strong note in early Asian trade today. While the sudden and sharp rise appears to be running ahead of itself, there is potential for USD to rise to the major resistance at 153.40. The major resistance at 154.00 is likely out of reach for now. On the downside, support levels are at 152.40 and 152.00.”

1-3 WEEKS VIEW: “We have expected a higher USD since early this month. As we tracked the advance, in our most recent narrative from last Thursday (24 Oct, spot at 152.60), we indicated that ‘upward momentum remains strong, and the next level to monitor is 153.40, followed by 154.00.’ There is no change in our view. Overall, only a breach of 151.50 (‘strong support’ level previously at 151.00) would signal an end to the USD strength.”

• The Dollar retraces the Asian session's gains and returns to the mid-range of 152.00.
• Investors are taking US Dollar profits ahead of key US releases this week.
• Political uncertainty in Japan suggestts that the BoJ will stand pat on Thursday.

The US Dollar has retraced most of the ground taken following the release of the Japanese election results, retreating from three-month highs at 153.75 to 152.50 so far.

The Yen dropped across the board during Monday’s Asian session as the elections in Japan delivered a significant defeat to the ruling party. The result opens an uncertain political scenario and puts into question the government’s support for the BoJ’s normalisation plans.

This scenario practically confirms that the Bank of Japan will keep interest rates on hold at its Thursday’s meeting.

The Dollar eases ahead of key US releases

The US Dollar, on the other hand, has opened the week on a somewhat softer tone. Investors might be trimming some USD longs, getting ready for a busy week, with US GDP. the PCE Prices Index and the Nonfarm Payrolls report, scheduled on the coming days.

The technical picture shows the broader bullish tone intact although the bearish divergence on the 4-hour RSI warns about a deeper correction. Supports are at Friday’s low, 151.60 ahead of 150.70. Resistances are 153.75 and 155.10.

USD/JPY rose, following hung parliament outcome. According to Japan’s NHK public TV, LDP coalition is set to lose a 233-majority in the 465 seat lower house. USD/JPY was last seen at 152.55 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.

Near term risks skewed to the upside

“LDP coalition only garnered 215 votes and would urgently need to find partners. The Constitutional Democratic Party of Japan, led by centrist leader/ former PM (2011-12) Yoshihiko Noda made huge gains to 148 votes. He can push to seek a coalition with other opposition groups, but it was last known that his party has had little success finding partners.”

“A hung parliament means that LDP coalition may face challenges passing policies in parliament. Uncertainty would weigh on Japanese equities and JPY in the interim. BoJ meeting (Thu) is likely a non-event as policymakers are likely to hold off rate increases until there is greater clarity with government and economic policies. Slowing BoJ policy normalisation and Fed in no hurry to cut, alongside US election risks may imply that USDJPY may well stay supported in the interim.”

“Bullish momentum on daily chart intact while RSI is again rising towards overbought conditions. Near term risks skewed to the upside. Resistance at 155 and 156.50 (76.4% fibo). Support at 151.50 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). We cautioned that verbal intervention could kick in only if USD/JPY trades quickly up to 155/156 levels but we doubt there will be actual intervention.”

The US Dollar (USD) is likely to trade in a range between 152.00 and 153.20. In the longer run, upward momentum remains strong; the next level to monitor is 153.40, followed by 154.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

To trade in a range between 152.00 and 153.20

24-HOUR VIEW: “When USD was trading at 151.05 yesterday, we highlighted that ‘provided that 150.50 is not breached, USD is likely to rise to 151.50.’ We indicated that ‘the major resistance at 151.90 is not expected to come into view.’ However, USD broke above 151.50 and 151.90, as it surged to a high of 153.18. USD pulled back from the high to close at 152.75 (+1.12%). The pullback in severely overbought conditions suggests USD is unlikely to rise much further. Today, it is more likely to trade in a range between 152.00 and 153.20.”

1-3 WEEKS VIEW: “Two days ago (22 Oct), when USD was at 150.90, we indicated that ‘there has been a clear increase in momentum.’ We also indicated that ‘if USD breaks above 151.00, the focus will then shift to 151.90.’ After USD broke above 151.00, we stated yesterday (23 Oct, spot at 151.05) that “The focus now is at 151.90.” Our view of a stronger USD was correct, but we did expect it to jump above 151.90 (high has been 153.18). Not surprisingly, momentum remains strong. From here, the next level to monitor is 153.40, followed by 154.00. Overall, only a breach of 151.00 (‘strong support’ level was at 150.00 yesterday) would mean that the advance that started early this month has come to an end.”

USD/JPY fell, in line with our call to sell rallies. Pair was last seen at 151.99, OCBC’s FX analysts Frances Cheung and Christopher Wong notes.

Elections outcome may have implication on USD/JPY

“Bullish momentum on daily chart intact while RSI is in overbought conditions. Bias to sell rallies Support at 150.70/80 levels (50% fibo retracement of Jul high to Sep low, 100 DMA), 148.10/30 levels (21 DMA, 38.2% fibo). Resistance at 153.30 (61.8% fibo retracement of Jul high to Sep low).”

“This morning, Tokyo CPI came in softer at 1.8% y/y (vs. 2.2% prior), somewhat reinforcing BoJ’s rhetoric of not rushing to normalise policy. Our house view does not look for BoJ to hike at upcoming MPC (31 October) though we are still of the view that BoJ is likely to tighten in Dec-2024, amid higher services inflation and wage pressures in Japan. But before that, the key event risk is Japan elections on Sunday (27 October).”

“Poll by Asahi newspaper showed that the LDP will likely lose majority in coalition with Komeito party while Kyodo news poll saw LDP constitutional democratic party spread narrowed. An LDP victory is likely to see policy continuity and should lead to USD/JPY trading lower. However, in the event LDP fails to win mandate, USD/JPY may risk rising further in the near term over monetary policy uncertainty that may be associated with the incoming administration.”

• USD/JPY falls due to mild correction in the US Dollar.
• US flash S&P Global PMI for October came in better than projected.
• Investors doubt whether the BoJ will hike interest rates again in the remainder of the year.

The USD/JPY pair falls to near 152.00 in Thursday’s North American session after refreshing a 12-week high near 153.20 on Wednesday. A mild correction in the asset is purely driven by a temporary pause in the US Dollar’s (USD) rally for a while.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, corrects to near 104.20 after revisiting the August high of 104.50.

The Greenback remains near its intraday low, although the flash S&P Global PMI data for October has come in better than expected. The report showed that activities in the service sector expanded at a surprisingly faster-than-expected pace to 55.3. Economists expected the Services PMI to have grown at a slower pace to 55.0 from 55.2 in September. Meanwhile, the Manufacturing PMI contracted for the fourth straight month but at a slower-than-expected pace to 47.8.

Meanwhile, the outlook of the US Dollar remains firm as the Federal Reserve (Fed) is expected to pursue the interest rate cut path at a moderate pace. Also, growing uncertainty over the United States (US) presidential elections has improved the US Dollar’s appeal as a safe haven.

In the Tokyo region, investors doubt whether the Bank of Japan (BoJ) will hike interest rates again after slightly dovish guidance from Governor Kazuo Ueda. "When there's huge uncertainty, you usually want to proceed cautiously and gradually," Ueda said on Wednesday, Reuters reported. The comments from Ueda also indicated that the BoJ need to more time to gain confidence about inflation sustainably achieving 2% target.

Upward momentum remains strong; the next level to monitor is 153.40, followed by 154.00, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.  

Next level to monitor is 153.40

24-HOUR VIEW: “When USD was trading at 151.05 yesterday, we highlighted that ‘provided that 150.50 is not breached, USD is likely to rise to 151.50.’ We indicated that ‘the major resistance at 151.90 is not expected to come into view.’ However, USD broke above 151.50 and 151.90, as it surged to a high of 153.18. USD pulled back from the high to close at 152.75 (+1.12%). The pullback in severely overbought conditions suggests USD is unlikely to rise much further. Today, it is more likely to trade in a range between 152.00 and 153.20.”

1-3 WEEKS VIEW: “Two days ago (22 Oct), when USD was at 150.90, we indicated that ‘there has been a clear increase in momentum.’ We also indicated that ‘if USD breaks above 151.00, the focus will then shift to 151.90.’ After USD broke above 151.00, we stated yesterday (23 Oct, spot at 151.05) that ‘The focus now is at 151.90.’ Our view of a stronger USD was correct, but we did expect it to jump above 151.90 (high has been 153.18). Not surprisingly, momentum remains strong. From here, the next level to monitor is 153.40, followed by 154.00. Overall, only a breach of 151.00 (‘strong support’ level was at 150.00 yesterday) would mean that the advance that started early this month has come to an end.”

• USD/JPY turns bullish after clearing the Ichimoku Cloud and 200-day SMA, with momentum suggesting further upside towards the 160.00 target.
• Key resistance levels include the October 23 high of 153.19, followed by 154.00 and the July 30 peak at 155.21.
• A bearish scenario would require a break below the 200-day SMA at 151.38, with further support at 150.79 inside the Kumo.

The USD/JPY extended its gains sharply during Wednesday in the North American session, sponsored by the close positive correlation with the US 10-year T-note yield, while traders remain concerned about US elections. At the time of writing, the pair exchanges hands at 152.60, up by more than 1%.

USD/JPY Price Forecast: Technical outlook

The USD/JPY rose above the Ichimoku Cloud (Kumo) and the 200-day Simple Moving Average (SMA), turning bullish for the first time since early August 2024.

Momentum clearly indicates that buyers are in charge, and targeting the 160.00 figure, once they cleared key technical levels. In addition, the Relative Strength Index (RSI) cleared the latest peak, meaning that further USD/JPY upside is seen.

The USD/JPY first resistance would be the 153.19 October 23 daily high, followed by the 154.00 mark. On further strength, the USD/JPY could challenge the July 30 peak at 155.21, before etending its gains to July 19 peak at 157.86.

For a bearish scenario, sellers must clear the 200-day SMA at 151.38, before pushing the exchange rate below the Tenkan-Sen at 150.79, and inside the Kumo at 150.70.

USD/JPY Price Chart – Daily

USD/JPY is rising as pre-election concerns the ruling LDP party could lose weakens the Yen. 

• A change in leadership could influence the BoJ’s policy trajectory, keep interest rates low, and weigh on JPY. 
• The US Dollar benefits from an improved economic outlook and less aggressive monetary easing projections.  

USD/JPY is trading over 1.2% higher on Wednesday as it exchanges hands in the 152.90s, an over ten-week high for the pair. USD/JPY is slightly off its highs of the day after the US Dollar (USD) edged lower following the release of US Mortgage Applications which sank by 6.7% in the third week of October. It was the metric’s fourth consecutive contraction and extended the 17% plunge registered in the previous week (ending October 11). 

More broadly, a combination of political instability in Japan and shifting economic forecasts, coupled with a revision of expectations about the future path of interest rates in the United States (US) is propelling the pair higher.

The Japanese Yen (JPY) has been experiencing considerable selling pressure due to domestic political uncertainty. Recent polls suggest that the ruling Liberal Democratic Party (LDP) may lose its majority in the upcoming general election. A potential leadership shift or the need for a coalition could complicate the government's policy-making, including the Bank of Japan’s (BoJ) approach to policy making – a major factor impacting the Yen. 

The International Monetary Fund's (IMF) downgrade of Japan's economic growth forecast to 0.3% for this year, down from a previous 0.7%, further exacerbates this pressure. A weaker economic outlook generally reduces demand for a currency, contributing to a decline in its value. 

In the near term the weak growth reflected in these revisions are contributing to downward momentum for the Yen, which can lead to an increase in the USD/JPY exchange rate.

In addition, recent Japanese inflation data has fallen below the BoJ’s forecast projections suggesting the bank may not be able to increase interest rates from their relatively low 0.25% level. Lower interest rates are negative for a currency as they can cause capital outflows. 

On the other hand, the US Dollar (USD) is enjoying a period of upside against the Yen, supported by a change in the outlook for monetary policy by the US Federal Reserve (Fed). Although the Fed decided to slash interest rates by 50 basis points (bps) (0.50%) at its September policy meeting due to concerns regarding the weakening of the US labor market, data since has calmed investor fears about employment in the US. 

As a result the Fed is now not expected to follow up with another double-dose rate cut in October, as had previously been suspected. This diluting down of the forecast trajectory for interest rates in the US has supported a rebound in the US Dollar, and a rise in USD/JPY. The less drastic fall in interest rates is supportive for the USD because it increases foreign capital inflows.

To summarize, the mixture of political uncertainty, weak projected growth and permanently low interest rates in Japan, versus the more buoyant economic outlook in the US and less dovish monetary policy stance of the Federal Reserve is leading to gains for USD/JPY that could very well extend. 

For now, the most interesting G10 pair remains USD/JPY, ING’s FX Francesco Pesole notes.

The 155.00 level becomes a tangible risk before the US election

“After clearing the 151.3 200-day moving average level, there is no clear technical resistance level into 155.0. The Japanese Yen (JPY) slump is both a function of higher USD yields and domestic political risk premium ahead of next weekend’s election.”

“The lack of verbal intervention by Japanese authorities so far has probably built speculative sellers' confidence, but we still think any threat of fresh FX intervention can lead to a material USD/JPY correction given the success of the latest Bank of Japan operations.”

“If the Minister of Finance stays quiet on the yen, 155.0 becomes a very tangible risk before the US election.”

USD/JPY had rebounded above 151, with the JPY being highly sensitive to the sharp rise in US yields, DBS’ FX & Credit Strategist Chang Wei Liang notes.

High risks of MOF intervention

“There is a risk that excessive JPY weakness will lead the BOJ to consider bringing forward its next rate hike, although this will likely await the outcome of Japanese elections on 27 Oct, with PM Ishiba having promised a supplementary budget post elections.”

“The IMF estimates Japan’s nominal neutral rate at about 1.50% and expects the BOJ to gradually raise rates. USD/JPY short-term volatility is high, but there is scope for a retracement below 150 if BOJ is to sharpen its rate guidance, as it had previously noted the stronger impact of exchange rates on inflation.”

“Furthermore, excessive JPY volatility, with USD/JPY having risen by over 10 big figures from 140 in September, heighten risks of MOF intervention. Being short USD/JPY at around 152.50 may offer a good risk-reward.”