USD/JPY recovered above 146.00 after testing a two-week low yesterday round 145.86, BBH FX analysts report.
BoJ fee hike odds restricted
“Japan non-public sector progress traction held regular in July. The composite PMI printed at 51.5 for as second consecutive month in July. The rise in service sector exercise (53.5 in July vs. 51.7 in June) was offset by a contraction in manufacturing output (48.8 in July vs. 50.1 in June).”
“Japan’s swaps market nonetheless price-in 80% odds of a 25bps Financial institution of Japan fee hike to 0.75% in December. Within the subsequent two years, markets indicate simply 50bps of fee will increase. In our view, the BOJ’s cautious normalization cycle limits JPY upside.”
