USDJPY Shorts Fundamentally overbought
The yen has hit almost 40 year lows. The BOJ meets this week to discuss their bond purchase reduction plan. They will announce their plan along with their rate hike at he end of the month on the 31st. If they raise rates higher and reduce bond purchases by 100 billion the yen will have a solid foundation to go higher and short USDJPY. The yield year yield spreads indicate the USDJPY should be trading at 140. The BOJ is the largest foreign holder of US debt. If they decided to intervene before the 31st they will sell treasuries spiking yields which spikes rates/mortgages. Canada cut rates last month and has still seen an increase in yields and mortgage rates due to the uncertainty of the yen. The bond and futures market is on edge until the BOJ announces their plan. The BOJ has over 200 billion in reserves to also deploy in intervention if needed. Overall most central banks are shifting policy and the BOJ needs to raise while weaker data is coming in for the US.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.