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USD/JPY Macro Update

• JPY weakness is creating more domestic concern
• JPY shorts remain popular amongst speculators
• Broad-based USD rebound helps to lift USD/JPY
• Strong US economy encouraged higher US yields & USD
• BoJ is gradually phasing out Yield Curve Control
• BoJ didn’t want to buy more JGB to keep yields below 1.0%
• Inflation expectations continue to increase in Japan 
• Stronger wage growth to trigger BoJ to tighten policy
• BoJ is moving closer to ending negative rate policy
• Fed’s rate hike cycle ended back in July
• US labour demand is weakening 
• US wage growth is slowing
• US unemployment rate is rising gradually
• US inflation has slowed more quickly than expected
• It will become harder to justify maintaining Fed’s restrictive policy stance 
• Deeply undervalued JPY to rebound
• Lower rates in 2024