Last week, economists at Westpac said we “look for a run at 137.” Now, they expect the USD/JPY pair to reach the 138 level.

The Bank of Japan is increasingly lonely

“As central bankers met in Portugal this week to swap notes on their fight against surging inflation, the BoJ is increasingly lonely. But it can point to ‘core-core’ inflation of 0.8% yr, hardly cause to declare victory after such a long battle to reach sustained 2% inflation.”

“The pullback in the US 10yr yield on recession talk means that the post-1998 spot USD/JPY highs are not backed by the 10-year Tsy – JGB spread. But with CFTC data suggesting specs are not stretched and USD/JPY dips meeting keen demand, we can’t call a high yet.”

“We see scope to at least 138 as the FOMC meeting edges nearer.”