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Dec 20 - 04:55 PM

USD/JPY - BoJ's Shock Higher Yield Cap Triggers Biggest Dive Since 1998

By Randolph Donney  —  Dec 20 - 01:45 PM

  • USD/JPY collapsed 4%, nearly reaching August's key 130.40 EBS low

  • BoJ unexpectedly raised its 10-yr JGB yield cap to 50bp from 25bp

  • Move a possible first step away from NIRP and YCC

  • Comes after MoF interevened in Oct to strengthen the yen

  • That as imported inflation hits real wages & support for government

  • Massive move likely wiped out more of remaining IMM spec longs

  • Creates some bullish O/S divergence risk while above 130.40

  • But below are major tech targets in the 125.50-6.50 range nL1N33A1DC

  • More weak US housing data also a dollar drag nL1N33A12O

  • Market still pricing in Fed rate cuts in H2 of 2023

  • BoJ now seen likely to hike rates by then

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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