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TDUX
Nov 11 - 10:55 PM
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USD/JPY - No Stopping USD/JPY Rise? Fed Hawkish, BOJ Leisurely

By Haruya Ida  —  Nov 11 - 08:55 PM

Nov 12 (Reuters) - Barring fresh Japanese FX intervention , further USD/JPY gains look unavoidable given the currently more hawkish US Federal Reserve view and the Bank of Japan's more leisurely pace of policy tightening.

The current BOJ view is for 25-basis-point moves every three months. Totan Research/ICAP shows the probability of a rate hike in December at 85% and again in March at 62%. There is no expectation of a 50 bps hikein either month.

In contrast, there is a view that the Fed could consider a 50 bp move at its December Federal Open Market Committee meeting after Fed Governor Christopher Waller said as much Tuesday . While it remains a slim possibility, the market is actively considering this proposition , , .

Sticky USD-denominated crude oil prices present another reason for continuing dollar strength. Prices have retreated considerably from recent highs, but Brent futures remain relatively lofty above $90/barrel. With no clear time frame for tensions in the Middle East to unwind, further declines may be difficult.

Wall Street also looks to have regained its footing after the recent tech and AI-share sell-off. Japanese and broader global investment in US stocks remains high, and not just for Anthropic's impending blockbuster IPO , .

Japanese shares are also seeing good rebounds, and foreign investor hedging of any fresh buys with currency hedges cannot be ruled out , .

Japanese exporters remain ready to sell USD/JPY and other major currencies on rallies but importers continue to show buy-side interest at almost every Tokyo fix, helping to support all yen pairs on yen rallies , .

Related comment , also . For more click on [FXBUZ]

USD/JPY:


Brent crude oil:


NASDAQ Index:


(Haruya Ida is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai)

Source:
London Stock Exchange Group | Thomson Reuters

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