USD/JPY: US Yields Acting As A Dampener For USD/JPY; Staying Neutral Here - BTMU

BTMU FX Strategy Research notes that US yields have run into key resistance levels acting as a dampener on USD/JPY.

"At the same time, Japan’s snap election has not supported any weakening by the yen yet. Many Japanese politicians are trying to look good ahead of the election starting October 10. The nonruling parties are trying to form alliances at the last minute. Japan’s external account data due next week may show steady surpluses. US and Japan PPI may beat market expectations.

However, market expectations of more monetary easing to come may not build. Japanese companies’ JPY buying flows could limit USDJPY topside. Japanese investors and banks may prudently manage their foreign bond positions with USDJPY forward hedges. Market expectations may not build much ahead of the October Fed and BoJ board meetings," BTMU argues.

BTMU is neutral on USD/JPY around current levels seeing the pair trading in a 111.50-114.50 range in the near-term.

Source: BTMU Research