Jpy monthly2610

Key arguments

• The US views the yen as substantially undervalued and has elevated currency policy to a leader-level issue, tying it to US policy toward China and broader trade strategy.
• The BOJ raised its policy rate to 1.25%, with December seen as the most likely timing for the next hike.
• Expectations of further Fed hikes, expansionary fiscal policy in Japan and the US, and Japan's trade and digital deficits remain sources of yen weakness.
• A sustained yen appreciation requires continued BOJ rate hikes and restored confidence in fiscal discipline.

Corresponding source evidence

1. ) Summary The US has elevated currency policy to a leader -level issue after the yen continued to weaken despite coordinated intervention at the end of July, with Washington viewing the yen as substantially undervalued.
2. Against this backdrop, the BOJ raised its policy rate to 1.25%, with December now seen as the most likely timing for the next hike.
3. However, the USD/JPY rising above 160 would likely prompt stronger warnings from the Japanese and US authorities and raise the prospect of further coordinated intervention, while the 200 -day moving average should also limit upside.