JPY to outperform many currencies going forward, but not necessarily USD – HSBC

The Japanese yen is an anti-cyclical and “safe-haven” currency and should outperform against slowing global growth momentum. However, it is also highly sensitive to the Fed’s impending policy normalisation, overshadowing its “safe-haven” allure. All in all, USD/JPY is likely to remain roughly stable before slowly grinding higher in 2022, in the view of economists at HSBC.

JPY may not be as good a “safe haven” as USD when weaker risk appetite is due to expectations of Fed’s policy normalisation

“On the one hand, the JPY is an anti-cyclical “safe-haven” currency, like the USD is. Hence, slower global growth and weaker risk appetite should drive the JPY stronger. But, on the other hand, the JPY is very sensitive to rising short-term US Treasury yields which reflect market expectations of changes in the Fed’s monetary policy. The JPY is a very low-yielding currency, thereby being highly susceptible to depreciation amid rising US interest rates.”

“We believe the JPY’s sensitivity to US yields is likely to overshadow the JPY’s role as a relative ‘safe haven’ at least when measured against the USD, which has a similar risk personality.”

“We expect the JPY to outperform many other currencies, but not necessarily the USD. We see USD/JPY remaining roughly stable for the rest of the year, before slowly grinding higher in 2022 once the Fed’s tapering commences and the focus switches to its policy rate’s lift-off next.”

“External factors drive our view on USD/JPY, but we note that several domestic factors are suggesting that there is no need to be too bearish on the JPY. For example, the Bank of Japan’s balance sheet is already in the midst of tapering and Japanese residents’ portfolio outflows have slowed.”


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

How do emotions affect trade?
Follow up our daily analysts guidance

Subscribe Today!    

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD slides under 1.16 as US Retail Sales smash estimates

EUR/USD is trading under 1.16 after US Retail Sales smashed estimates with 0.7% in September. Treasury yields are rising. The risk-on mood continues to underpin the pair, as the ECB policymaker Wunsch dismisses inflation concerns. 


GBP/USD retreats below 1.3750 after US data

GBP/USD has pared some of its gains after US Retail Sales beat estimates, with the core group hitting 0.8% last month. Earlier, investors shrugged off dovish comments from two BOE members. 


XAU/USD slumps to $1,770 area on upbeat US data, surging US bond yields

Gold started the last day of the week on the back foot and extended its slide to a fresh daily low of $1,770 in the early trading hours of the American session pressured by the dollar's resilience and surging US Treasury bond yields.

Gold News

Crypto bulls on winning streak pushing for more

Bitcoin price favors bulls reaching $60,000 by the end of this week and onwards to new all-time highs by the end of next week. Ethereum price broke a bearish top line and could hit new all-time highs by next week in tandem with Bitcoin. 

Read more

Why is Tesla going up?

Tesla's (TSLA) stock price has finally pushed higher in a series of steady and sure moves. We had nearly given up on our bullish call with Tesla stock as it kept struggling around the $800 level.

Read more