USD/JPY is up for 13 consecutive days. This can’t go on


Today’s Japanese CPI report certainly didn’t force the Bank of Japan’s hand. With prices up 3.0% YoY (as estimated), there is no rush to change tack. Additionally, the BOJ has increased its regular bond buying, signaling that nothing new is coming in next week’s BOJ decision.

At the same time, the US dollar is sizzling. Ten-year Treasury yields rose another 8.8 basis points today to 4.31% and 30 basis points in three days. In turn, USD/JPY added 172 pips to 151.86 in what will be the 13th consecutive day of gains.

This cannot last indefinitely.

At the same time, this is clearly a fundamentally reasoned decision. The only way to change it is to change the fundamentals and only the BOJ and the Fed can do that.


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