USD/JPY dropping on diminishing expectations for expanded fiscal spending in US - BTMU

Analysts at Bank of Tokyo Mitsubishi explained that market expectations for expanded fiscal spending in the US have diminished and US Treasury yields have fallen following speeches by the outgoing and incoming presidents this week.

Key Quotes:

"This in turn has driven USD/JPY to the 114 level.

Japanese investors have begun their usual seasonal cash repatriation.

Japan has reported current and trade account surpluses, which could weigh heavily on USD/JPY topside at around 116. But the US-Japan yield gap would theoretically keep the lower bound at around 113-114.

The lower bound could also be supported by JPY selling pressure triggered by FX exposure to reduce hedge trading, as well as by reflationary momentum still above the make-or-break mark of 50 according to the Economy Watchers Report.

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 securities. 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 Forex 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.