The Japanese Yen (JPY) is strong, up 0.5% against the US Dollar (USD) and once again outperforming all of the G10 currencies on a combination of both sentiment and fundamentals as market participants eye the US government shutdown as well as the outlook for the BoJ, Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
BoJ adds to support given focus on rate hikes
„The yen’s safe haven role had been diminished earlier this year as a result of trade tensions, political risks, and bond market turbulence however it looks to be reclaiming its position in an environment of renewed uncertainty.“
„In terms of fundamentals, the outlook for relative central bank policy is bullish for the yen and the latest Tankan business sentiment survey (as expected) offers a green light for those looking to resume tightening.“
„Near-term risk lies with speeches from Dep. Gov. Uchida on Thursday and Gov. Ueda on Friday. For USD/JPY we are bearish following the break below the 50 day MA (147.81) and look to an extension of the decline toward 142.00.“