The Japanese Yen (JPY) is powerful and outperforming all the G10 currencies with a 0.8% achieve towards the US Greenback (USD), Scotiabank’s Chief FX Strategists Shaun Osborne and Eric Theoret report.
JPY outperforms on narrowing spreads
“The outlook for relative central financial institution coverage stays dominant, as market members contemplate the potential for an accelerated timeline for management adjustments on the Fed. For Japan, this week’s commentary from the BoJ has leaned hawkish with a heavy qualification on the result of commerce talks with the US.”
“The BoJ has additionally maintained its concentrate on bond market developments, given current turbulence, and may discover some reassurance within the newest two yr bond public sale that noticed its highest bid-to-cover ratio (3.9) since January.”
“Narrowing US/Japan yield spreads provide the JPY elementary assist, and 2Y spreads are drifting again towards their current lows threatening a break to ranges final seen in mid-2022. For USDJPY, we await a break of the current vary lows round 142.50 and the psychologically vital 140 degree that provided intraday assist in late April.”
