USD/JPY: Will BoJ Step In to Prevent Greenback From Breaching Crucial 152 Level?
Thrice in a week, the Japanese government passed on intervening in the forex markets when the USD/JPY pair crossed 150 to the dollar.
Why 150?
It wasn’t so much a magic number as the level that triggered Tokyo’s monetary authorities to stage a defense of the yen on Oct 3, when it breached that point. As such, expectations were set around there for Japanese monetary authorities to act and they didn’t.
The greenback has, however, been relentless — not collapsing as many projected it to but instead springing back at every attempt to push below 105 the Dollar Index that ties the currency against six majors, including the yen.
Surprisingly good US macroeconomic data that keeps reinforcing the story of American exceptionalism versus the rest of the world has been a driver for the dollar.
That doesn’t look like it's going to end anytime soon with third-quarter US gross domestic product, or GDP, growth projected at 5.4% by the Atlanta Fed, a division of the central bank.
The Federal Reserve itself may be done with rate hikes after 11 increases between March 2022 and July 2023 that brought the key US lending rate to 5.25% from a previous 0.25%. But the dollar isn’t done going up.
The sell-off in US bonds cannot stop beyond a few days either, keeping the yield on the benchmark US 10-year Treasury note not too far from Monday’s 16-year high of 5.021%.
Charts by SKCharting.com, with data powered by Investing.com
The dollar’s strength brings us to what’s in store for the yen. Japan's flash Purchasing Managers Index, or PMI, points to a stalling private sector economy at the start of the fourth quarter, raising early recession warning signals for the Bank of Japan, or BOJ.
The Services PMI fell from 53.8 to 51.1, expanding at the
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