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Apr 10 - 06:55 PM

HSBC: USD/JPY's Potential Ascent Toward Historical 1990 Peak at 160

By eFXdata  —  Apr 10 - 03:00 PM

Synopsis:

HSBC discusses the Japanese Yen's (JPY) vulnerability against the US Dollar (USD), with a possible upward trajectory for USD/JPY toward its peak level of 160, last seen in April 1990. Recent comments from BoJ Governor Kazuo Ueda, emphasizing no early rate hikes in response to currency fluctuations, have not favored the JPY. With upcoming US CPI data and the market's anticipation of a stronger print, there's apprehension about USD/JPY breaking the 152 mark, which could prompt Japan's Ministry of Finance (MoF) to intervene. However, HSBC speculates that intervention might occur at higher levels than previously witnessed, potentially undermining domestic confidence and encouraging global short JPY positions.

Key Points:

  • BoJ's Stance: Governor Ueda's recent remarks underscore a hesitancy to use rate adjustments as a tool for managing currency movements, placing additional pressure on the JPY.
  • US CPI Data Anticipation: Upcoming inflation figures from the US hold the key to immediate USD/JPY movements, with a stronger-than-expected outcome possibly testing the 152 threshold.
  • Intervention Threshold: There's speculation that Japan's MoF might opt for intervention at levels beyond the previously observed 152 mark, potentially pushing USD/JPY to test its historical 1990 high of 160.
  • Global Positioning: The combination of domestic policy stance and international monetary policy expectations may embolden a rise in short JPY positions, contributing to the currency pair's ascent.

Conclusion:

Amid heightened anticipation for US CPI data and the BoJ's cautious stance on rate hikes, HSBC posits a scenario where USD/JPY could ascend towards its 1990 peak of 160. This outlook hinges on the MoF's potential intervention strategy and global market dynamics, including Fed policy expectations. The analysis underscores a critical juncture for the JPY, where domestic and international monetary policies intersect with speculative market positioning, influencing the currency's path forward.

Source:
HSBC Research/Market Commentary

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