Skip to Content
scroll

Thoughts on the USDJPY currency cross

Advanced Search

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

Ask a question

    The Latest Q&A

    Question asked

    Thoughts on the USDJPY currency cross

    Hi guys, I thought I'd throw you a currency question this week to keep you on your toes. I'll keep it short and sweet. USDJPY has behaved exactly opposite to what I thought it would, considering the end of negative rates I thought the Yen would've had a nice bullish run. When we also consider that the US is closer to rate cuts too, I find it strange. Can you give any reasons or explanation as to why? My only thoughts are it was the worst kept secret and it was already priced in, and/or, the market is pushing the Yen down to force a larger rate increase. FWIW; the temptation was to strong and I entered a sell position at 151.55 seeing the risk reward in my favour. Regards, Simon

    Answer

    Hi Simon,

    Thanks, variety is the spice of life! This is one currency cross we have called reasonably well post COVID but our big call is approaching fast, you have touched on some of our reasoning already in your question.

    • The Fed is set to cut interest rates 3 times in 2024 while the BOJ has finally ended its negative interest rate policy, i.e. the respective central banks are moving in opposite directions.

    However as you say the USDJPY rallied this week which we believe is because the news was built into the market and investors/traders don’t necessarily believe the BOJ will hike further after ending its negative rates regime which had been in place since 2016. Hence investors will still receive a far greater yield on money held in $US albeit at decreasing differential through 2024.

    • We are looking for a spike above 152 by the USDJPY but we caution it could easily reach 160, remember the trend is up, or bullish.

    Ultimately we believe the macro factors will pull the USDJPY much lower but if we were traders we would be looking for decent risk/reward selling triggers/opportunities – it would be lucky to nail the top first time!

    chart
    image description
    $US-Japanese Yen
    image description

    Relevant suggested news and content from the site

    image description
    Overview
    image description
    A discussion with Geoff Wilson – Wilson Asset Management & James Gerrish – Market Matters
    image description
    Thursday 17th April – ASX +24pts, CGF, BHP, STO
    image description
    Major Movers Today
    image description
    Ausbiz: Research Lead Shawn Hickman discussing Copper
    image description
    Thursday 17th April – Dow -699pts, SPI down -26pts
    image description
    Stocks This Week – Source Bloomberg
    image description
    Wednesday 16th April – ASX +20pts, BOQ, RIO, ZIP
    image description
    Sectors This Week – Source Bloomberg
    image description
    Wednesday 16th April – Dow -155pts, SPI down -3pts
    Members only

    UNLOCK MARKET MATTERS NOW

    Take a free trial.

    No payment details required.

    Already a member? Click here to login
    Back to top