The $US found some support last week following the solid economic releases, but at this stage, we believe it’s just a case of the “interest rate cut can” being kicked down the road as opposed to taken off the table, e.g. swap traders have moved from June to July with their call for the first cut by the Fed. We wouldn’t be surprised to see this pushed back a little further, but ultimately, we believe the $US will face a headwind from rising bonds and falling rates.
- No change; we remain net bearish on the US dollar, targeting a test and eventual break below 100 support.
MM remains bearish toward the $US over the medium/long term.
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The Yen hasn’t gained strength from the anticipated rate hikes through 2024, with the USDJPY still hovering near its thirty-year high. This feels likely to reverse through 2024/5 with the Fed set to cut rates and the BOJ starting to hike, but as we often say, “Don’t fight the tape.” However, this is a move we believe will unfold with some gusto over the coming months/years; bulls need to be patient for now.
- We can see the Spot Yen popping above 152 to fresh multi-year highs, but it’s a move we would fade.
MM is bullish towards the Yen (bearish the USDJPY) over the medium term
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