Amid the US midterm elections and expectations of a BOJ rate hike, concern is growing that the yen will continue to strengthen. A break below ¥152 could accelerate the yen’s appreciation and trigger a full-scale unwinding of carry trades.
Signs of a shift in the yen’s previous weakening trend have emerged in the foreign exchange market, with the US dollar/yen exchange rate briefly falling into the ¥152 range. Matsuda Satoshi (松田 哲), known as a veteran dealer, points out that a break below ¥152 could bring a rapid appreciation of the yen into the ¥150 range.
Matsuda Satoshi (松田 哲) has worked as a top dealer at The Mitsubishi Trust and Banking Corporation and other firms. Drawing on his experience of past market events, including the sharp decline following the Plaza Accord, he explains the current market trends. He says that the external environment surrounding the foreign exchange market is now undergoing major changes.
The background includes speculation over US monetary policy and pressure from the Trump administration for Japan to raise interest rates. After the Federal Reserve signaled a possible rate hike at the Jackson Hole meeting, the market began to anticipate a rate hike at the FOMC, supporting the dollar.
However, President Trump has stepped up calls for lower interest rates, and some believe that the Federal Reserve could maintain its independence while choosing to leave rates unchanged. The market is anticipating a sell-off in the dollar if expectations of an additional rate hike recede.