The Japanese yen leads gains in todayâs FX session amid uncertainty over the size of the expected Fed rate cut and BoJ bankersâ continued willingness to continue the rate hike cycle. USD/JPY is down 0.7% and is breaking out to levels not seen since January of this year.
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āđāļāļīāļāļāļąāļāļāļĩ āļĨāļāļāļāļąāļāļāļĩāđāļāđāļĄāđ āļāļēāļ§āļāđāđāļŦāļĨāļāđāļāļāļĄāļ·āļāļāļ·āļ āļāļēāļ§āļāđāđāļŦāļĨāļāđāļāļāļĄāļ·āļāļāļ·āļOptions positioning continues to support the yenâs gains, although the extent of USDJPY hedging has been decreasing since early August. Source: Bloomberg Financial LP
The spread between Japanese and US interest rate expectations has undermined the long-standing USDJPY carry trade, triggering a slide in USDJPY. The renewed expectation of a 50 basis point US rate cut next week is putting further pressure on the dollar, strengthening the Fedâs heavily policy-dependent yen. Source: Bloomberg Financial LP
USDJPY breaks to the lowest levels since early 2024. Â Source: xStation
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