Yen's Near-Term Outlook Depends on BOJ September Guidance

Dow Jones
09/11

0330 GMT - With a September rate hike by the Bank of Japan fully priced in, the yen's near-term outlook should depend on the degree of hawkishness in its forward guidance next week, TD Securities analysts say. Guidance that doesn't put an October or December rate hike on the table would likely lead to a knee-jerk yen selloff back toward 157-160 to the dollar, TD says in a note. Yen could also weaken against emerging-markets high-yielders like the rupiah. Any hints of faster-than-quarterly tightening from BOJ Gov. Ueda would likely be interpreted as hawkish by FX investors. If market pricing for the future BOJ rate hike path hovers around 2% by 2Q 2027 after the September meeting, TD expects the yen to gradually lose its appeal as a global carry funding currency.

 

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