18 Feb 2015
USD/JPY faces consolidation in the near term – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Morten Helt expects the pair to attempt a consolidation pattern ahead of the initial rate hike bythe Fed.
Key Quotes
“We continue to see divergence between BoJ and Fed policy acting as a driver of USD/JPY upside”.
“We expect the Fed to hike in June which should ensure that the cross stays supported in the coming months”.
“However, pricing of the Fed hiking cycle is likely to be data-dependent and in the short term, USD/JPY is likely to be trendless and volatile, and by and large to trade in tandem with general risk sentiment”.
“Our baseline is that BoJ will not ease further as headline inflation still looks like coming in close to the central bank’s target of 2% by end Q1 16”.
“If we are right and BoJ stays put, USD/JPY could stay range bound ahead of the Fed; rally on FOMC re-pricing; and then range trade again towards year end as it becomes clear the BoJ is done for now”.
Key Quotes
“We continue to see divergence between BoJ and Fed policy acting as a driver of USD/JPY upside”.
“We expect the Fed to hike in June which should ensure that the cross stays supported in the coming months”.
“However, pricing of the Fed hiking cycle is likely to be data-dependent and in the short term, USD/JPY is likely to be trendless and volatile, and by and large to trade in tandem with general risk sentiment”.
“Our baseline is that BoJ will not ease further as headline inflation still looks like coming in close to the central bank’s target of 2% by end Q1 16”.
“If we are right and BoJ stays put, USD/JPY could stay range bound ahead of the Fed; rally on FOMC re-pricing; and then range trade again towards year end as it becomes clear the BoJ is done for now”.