JPY RIP?Last week was particularly rare week for the USDIndex. On Friday, the DXY gained 1.5% in the best 24hrs since march 2020. The probability of such event occurring was 0.01%. The USD has clearly been on an impressive winning streak as of late, is there more growth to be had?
The Bank of Japan was lackluster as expected , but the ministry of finance surprise intervention caught FX Markets off guard, sparking a huge turnaround in the JPY. The efforts of the ministry of finance efforts are unlikely to produce a lasting reversal in the Yen, so long as the BOJ's QQE with Yield curve control policy remains in place. While the BOJ's interest rate decision went & came with out much kerfuffle, It was Japans Ministry of Finance that sparked a rally in the JPY. GBP/JPY fell by -4.73% while EUR/JPY fell by -2.94%, AUD/JPY & NZD/JPY rates suffered as well, falling by -2.49% & -3.85% .The standout pair was the USD/JPY, buffered by the FED, adding 0.28%.
Intervening in FX Markets to support the Yen for the first time since 1998, the ministry of finance helped the JPY crosses their best weekly overall performance since the end of February . Now that the ministry its willingness to step into the market, the next question is has the weakness in the Yen come to an end? The answer is likely not , the ministry of finance's efforts are clear sign that the bank of Japan wont be relenting anytime soon. With all the other central banks hiking rates to combat inflation wile the BOJ continues to pursue QQE with yield curve control policy, the interest rate gap between the Yen & other major currencies will persist.
I most definitely see USDJPY heading towards 150.000 , A +4.47% ( 642.4 pips) from markets current position.
