USD/JPY bears in charge but bulls eye 150.00s longer-term

USD/JPY fell from 143.69 at the end of the week to score a low of 142.83 as the greenback moved down slightly on Friday but registered a gain for the week as traders remain of the view that the US Federal Reserve will stick to an aggressive path when it hikes interest rates this week.

The US dollar found some support when consumer sentiment improved moderately in September. The University of Michigan's preliminary September reading on the overall index on consumer sentiment came in at 59.5, up from 58.6 in the prior month. Economists polled by Reuters had forecast a preliminary reading of 60.0 in September. The greenback's DXY's index that measured it against a basket of currencies fell 0.1% on the day to 109.68. It reached a two-decade high of 110.79 earlier this month. For the week, it was up 0.6%, and it is up about 15% for the year so far. The markets are in anticipation that the Fed will hike by 75-basis-points with there being some chance of a 100-bps increase.

Other than the Fed, the Bank of Japan is expected to maintain its accommodative stance at its meeting on Sept. 21-22 it has commonly communicated that it has no intention of raising rates or tweaking its dovish policy guidance to prop up the yen. Meanwhile, analysts at Rabobank have argued that USD/JPY 140 could be problematic for Japan, which imports a substantial proportion of its energy. 

''However, it is often the pace and volatility around currency movements that prove more worrisome for policy makers rather than a certain level.  Either way the dip back towards 142.00 this week will be welcomed by Japanese officials.  That said, it is our view that USD strength will sustain for some months yet.  It is also possible that the BoJ will maintain loose policy settings into next year.  This suggests scope for USD/JPY to head higher in the coming months.  A move to 150 can not be ruled out.''