USD/JPY: Trade weight index vs spot USD/JPY, interest rates

Brian Twomey Brian's Investment

Green = Interest Rates.

Red = Nominal Spot Rate.

Blue = Effective Trade Weight Index.

The period runs from 1980 to 2023. The spot rate trading above the Effective Trade Weight Index is correct in any trade year or period because the Effective Trade Weight Index is factored to Oil and GDP for monthly releases to Imports and Exports.

The Green interest rate line represents pre 2016 negative rates.

USD/JPY Vs Effective Exchange Rate Index for June to represent the period from 1996 to 2023.

Blue = Nominal Spot Rate.

Orange = Effective Trade Weight Index.

Overall, fairly big move from June to December was seen early.

BOJ interest rates

BOJ Interest Rates dropped in 2008 /2009 then traveled to negative in 2016. From 2016, interest rates failed to move.

The period covers 1990 to 2023. As 2024 approaches and promises to central bank drops to interest rates, the BOJ will remain on hold and not move interest rates by 1 point.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

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