Despite a positive position on the Japanese Yen (JPY), Elias Haddad of Brown Brothers Harriman (BBH) observes that the USD/JPY is trading in a range of 155.00-160.00 and anticipates that this will continue until the energy shock subsides. Haddad draws attention to the Bank of Japan's (BoJ) increasingly hawkish signals. Masu's remarks and earlier dissents bolster the argument for a June rate hike, which puts the pricing at 75% odds.
JPY positive but limited by an energy shock
"USD/JPY is trading in the middle of a range that has lasted more than two months, from 155.00 to 160.00. On JPY, we continue to be constructive. However, USD/JPY will probably stay in that range until the energy shock subsides.
The Bank of Japan is becoming more willing to raise interest rates. A member of the BOJ's board, Kazuyuki Masu, said, "If there are no clear signs of an economic slowdown, it's better to increase the policy rate as soon as possible."
Masu's comments support the idea of raising interest rates in June, especially since three other members of the BOJ—Nakagawa Junko, Takata Hajime, and Tamura Naoki—had previously voted against tightening rates during the April meeting. The swaps market still expects a 25 basis point increase in the BOJ's rate, bringing it to 1.00%, for the June 16 meeting, with about a 75% chance of that happening.
JPY positive but limited by an energy shock
"USD/JPY is trading in the middle of a range that has lasted more than two months, from 155.00 to 160.00. On JPY, we continue to be constructive. However, USD/JPY will probably stay in that range until the energy shock subsides.
The Bank of Japan is becoming more willing to raise interest rates. A member of the BOJ's board, Kazuyuki Masu, said, "If there are no clear signs of an economic slowdown, it's better to increase the policy rate as soon as possible."
Masu's comments support the idea of raising interest rates in June, especially since three other members of the BOJ—Nakagawa Junko, Takata Hajime, and Tamura Naoki—had previously voted against tightening rates during the April meeting. The swaps market still expects a 25 basis point increase in the BOJ's rate, bringing it to 1.00%, for the June 16 meeting, with about a 75% chance of that happening.
