Yen Traders Showing No Fear of Early BOJ Rate Hike
USD/JPY is climbing in early business with help from the implication of higher yields as Treasury futures edge lower, which shows that yen bears are picking up where they left off in December.
FX traders heard from BOJ Governor Ueda on Christmas Day and it hasn’t altered their view that an early interest-rate hike isn’t likely. Indeed, it could take a series of hawkish sound bites from BOJ speakers to persuade investors that January is still a live meeting when derivative pricing shows that a full 25-bp increase isn’t seen until June.
There is still the risk of verbal intervention from Japanese officials, even though local markets are on holiday until next Monday. However, FX traders are using knee-jerk selloffs in USD/JPY to load up again on long-dollar exposure. Which is set to be the theme until the BOJ steps in with fresh hawkish language to support the currency.
Source : Bloomberg