Piet P. H. Christiansen, senior analyst at Danske Bank, points out that the USD/JPY pair crossed 108 into 107 territory as Mr. Powell is leaning against the poor cyclical backdrop.
“We extrapolate: data is likely to continue showing that a cyclical slowdown is still with us but we expect to meet it by adjusting US yields and the dollar, appropriately. This is exactly what global macro needs to avoid a more gloomy path. Our 3M forecast is 107 but there's clearly downside risk to(wards) 105.”
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