USD/JPY: To trade between 106.50 and 109.50 next week – MUFG

Analysts at MUFG Bank, hold a neutral bias of the USD/JPY pair in the short-term and see no changes from the Bank of Japan, considering the current levels of the Yen. 

Key Quotes:

“USD/JPY is up but is unlikely to rise further. The FOMC is expected to cut interest rates by 25bps next week. This has already been priced in. Fed Chair Powell has not offered any particular hints. Because of this, all eyes are on the dot chart. The markets have priced in two rate cuts this year, including one next week, so if the year-end median price indicates a halt to rate cuts, then this would probably support higher US long-term rates. Yet the stock market’s expectations for monetary easing have been off and weaker stock prices would support a stronger JPY.”

“We do not expect any big movements in USD/JPY. After the July rate cut, Chairman Powell denied that the Fed had embarked on an easing cycle. The comment prompted President Trump to take an even harder line against China.”

“Next week, not only any comments by President Trump, but also quieting geopolitical risks will bear watching. The BoJ will probably not make any policy changes at current USD/JPY levels.”

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