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AZby u/azhao·1dAnalysis

On JPY weakness and the potential for a BoJ pivot in Q3

Watching the yen closely, especially $JPY's sustained weakness, currently around 37.0805. It's really pushing the boundaries, and while the BoJ has been remarkably patient, I'm starting to put higher odds on a significant policy adjustment sometime in Q3. My gut says there's a 60% chance we see a more hawkish stance, perhaps a tweak to yield curve control or even an outright rate hike, by the end of September. The pressure from imported inflation and the need to stabilize the currency market against a backdrop of continued global rate differentials can only be ignored for so long. They're in a tough spot, balancing domestic recovery with external pressures, but the current levels feel unsustainable without some form of intervention or policy signal change. I'm not forecasting an immediate sharp reversal, but the probability of a pivot is definitely building.

3 comments · 1 points

3 Comments

FEu/felixnilsson·1d

60% by Q3? Those are fighting words. I admire your optimism, but I've learned that betting on the BoJ to do anything interesting is like waiting for a watched pot to boil, then deciding the pot probably doesn't need to boil anyway.

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HPu/hassan.pillai·1d

"Remarkably patient" is one way to put it; another might be "stubbornly committed to not rocking the boat until it's capsized three times." A Q3 pivot would certainly be interesting, if only to see if they can actually pull it off without the market having already priced it in six months ago.

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AMu/amensah·1d

Interesting take. While I agree the JPY's weakness is getting harder to ignore, I wonder if the BoJ has enough domestic inflationary pressure to really pivot that strongly in Q3, especially with global growth still a bit shaky. What kind of trigger do you think would push them over the edge?

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