USD/JPY: subdued while yen crosses paint a picture of market uncertainty

USD/JPY is stabilizing the strength of the greenback after last week's US CPI data that drove a spike in the dollar, albeit left the major relatively unchanged while the yen continues to find support in the uncertainty surrounding the BoJ.

In respect to the BOJ, Kit Juckes, economist at Societe Generale explained that the Central Bank has struggled ever since their surprise decision to cut rates into negative territory backfired at the end of January." In that regard, they followed the path of the Chinese authorities whose decision over a year ago to let the CNY weaken backfired equally spectacularly, and the SNB, whose decision to remove the EUR/CHF floor at 1.20 did nothing to ease reserve accumulation, nothing to boost capital outflows and nothing to fight deflation," Juckes explained, adding, "But they're the lucky ones, as the economy appears to have weathered the strong currency relatively well over the last 18 months." 

This all makes for a very compelling meeting this time around and at the same time, the FOMC will be strongly scrutinized ahead of presidential elections in the US that will no doubt take the limelight from here on while once done, the Fed might be expected to act should data improve and making for a bid case for the major in respect to the yield differential driving the price.  

The Yen catches the risk adverse bid 

Meanwhile the yen crosses have given good business and a fair slice of the action of late, with today's strong bid in the risk barometer that is AUD/JPY, up from 76.37 to 76.88 and GBP/JPY dropping in free fall from 134.50 to recent 132.73 lows. Further to overall market uncertainties, Brexit is back in focus this week and concerns over how such a scenario exposes Britain outside of the European single market as a stand fast EU will not make life easy for Britain and deny them of having their cake and eating it, while reported on Bloomberg "Chancellor of the Exchequer Philip Hammond is ready to accept that Britain may have to give up membership of the European Union’s single market."