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Robert Rennie, Research Analyst at Westpac, suggests that the recent BoJ meeting, ongoing turbulence within the JGB market and of course ongoing US/China trade spat all add to the sense that USD/JPY should remain fairly closely tethered to 111.

Key Quotes

“This is very much within our near term neutral forecast for USD/JPY. We see the next round of $16bn of tariffs by both China and the US as done, and the next $200bn as arriving late September. This is likely to be enough to keep USD/JPY in a 110-112 range over the next few weeks too.”

“However, we still hold out hope for higher levels – the Fed will deliver in Sep and (likely) in Dec too. Meanwhile the pace of liquidity add has collapsed in Japan and more will be required.”