Future JPY/USD rates

[sutebayashi]

Yeah. Right now inflation is “only” 3% (which sounds good because of how bad it is elsewhere, but is a whole percentage point above the BOJ’s own target, and they are mimicking the failed overseas approach of hoping it will be “transitory”).

So chances are high, for mine, that the policy makers stick with the current approach for a while longer, rather than adjust policy, but if inflation ratchets up higher still the calls for heads from the public will start to grow louder still.

I think there will come a point where the policy makers can’t keep their heads in the sand any longer and change policy settings. Some like Fujimaki think it’s game over either way, but at least in the short term I think the yen could see a bounce, with the indication of policy change.

It’s interesting to see where things are at with the UK. They are racking up debts and their bond market screamed “no more”, but in Japan the BOJ owns the bond market. The currency value alone is able to send a loud caution signal. So far, they haven’t heeded it at all though, preferring to talk tough about fighting the speculators.

[goran]

any particular reason for USD/JPY to decrease to around 146 from around 149 about 4 days back?
Did I miss anything?
Is this another sneaky attempt at intervention by buying yen?

[sutebayashi]

US long term rates have come off over the last week, on speculation that the FOMC will start to ease off on the rate hikes. I would guess that is the main factor.

My speculative guess is that nothing has really changed, and a little reprieve for the yen is a good chance to sell a little more at better levels. Even when the FOMC does stop hiking rates, the best I see for the yen is some strength on profit taking by speculators, but then more of the same again. The interest rate differential driver is still there, energy import prices are still high, and Japanese business adjusting to take advantage of a weaker currency is going to take time if it is to happen at all. Some indication of policy change in Japan could start to reverse the rot, if eventually followed up by actual action.

[goran]

https://www.ft.com/content/1d93c771-ee9 ... 120d59f43c

So, perhaps not another 1 USD = 150 JPY in this cycle? what are you thoughts?

[sutebayashi]

No FT subscription here, but US inflation is still at 7.7% with that latest reading, albeit lower than the guesses were. If it continues to roll over then yes, but if it doesn’t continue to roll over, then no

[goran]

Sorry about the paywall. This worked for me.

https://12ft.io/proxy?q=https%3A%2F%2Fw ... 120d59f43c

Slight bounce in S&P500 and also appreciation of JPY (larger than what can be amounted to sneaky interventions, I guess)

Not basing any of my financial decisions on these. Just hopeful for a slightly reasonable vacation sometime next year. (Fingers crossed)

[captainspoke]

...Slight bounce in S&P500 ...

Slight bounce?!?

I was going to post about how that showed time in the market is more important than timing it.

[sutebayashi]

It was a good bounce wasn’t it, kinda like a trampoline bounce.

Personally I can imagine that 151 might be the high in the USD/JPY rate for 2022, but I think this week’s dollar dump presents a nice opportunity to buy some dollars at better levels. Normally I would do my rebalancing in December but maybe Christmas has come early here, at least in terms of the fx rate.

I still think there is a long way to go in the inflation fight, and tend to think the dollar will find further strength against the yen in the months ahead.

[goran]

Surprise, surprise!

https://www.japantimes.co.jp/news/2022/ ... yield-cap/

[sutebayashi]

6 months down and the JPY continues to fall...147 today.

Guess my 130 target band was pretty far off (though at the time it seemed okay).

Just looking back through this thread, your target band is looking alright now 2 months later wild ride though