USD/JPY: The pace of depreciation will be gradual in the near term, decisive break below 140 in 2Q24 – ING
|The Bank of Japan did not give in to market pressure and kept its dovish guidance intact. In the view of economists at ING, the Yen should revert to being driven mostly by US rates after taking a hit today.
April hike on the table
The Bank kept its dovish guidance unchanged which forced markets to abandon most speculations of a rate hike already in January. But we identified a few changes in the Bank’s assessment of the economic outlook that likely endorse market’s lingering expectations for a hike in April. We expect the yield curve control to be scrapped in January and a hike to be delivered in April.
The Yen may simply revert to being primarily traded by external factors (US rates in particular) after the BoJ ignored market’s pressures and likely signalled the path to normalisation should be a gradual one.
We remain bearish on USD/JPY in 2024, as the oversold Yen can still benefit from the end of negative rates in Japan and we see the Fed cut rates by 150 bps, but the pace of depreciation in the pair will be gradual in the near term, and we only see a decisive break below 140 in 2Q24.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.