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4:08 PM ยท 21 June 2024

USDJPY close to zone of multi-year peaks ๐Ÿ“ˆ

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The USDJPY pair extends its rally, approaching the zone of local highs (levels highest since 1990). On Thursday, the U.S. Treasury Department added Japan to its so-called "watch list" for currency practices, though it stopped short of labeling it a currency manipulator, which strengthened the downward pressure on the yen.

The Japanese central bank maintained its interest rates on June 14 within the range of 0.00-0.10%, as expected by the market. However, the decision to purchase bonds was a surprise. It was widely anticipated that the bank would slow the pace of bond purchases, but instead, it decided to keep it at the unchanged level. This was a significant dovish surprise, although the Bank also announced that it would provide details on tapering at its July meeting.

Surprising comments following the Bank of Japan's decision significantly modified the implied interest rate curve in Japan. Over the month, the market eliminated the chance of a BoJ rate hike of 7.5 basis points by the end of this year. It is worth to keep in mind that the base size of rate changes in Japan is 10 basis points.

The USDJPY pair breaks above the 159.500 barrier and thus approaches this year's peak zone. Source: xStation 

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