Sanword Securities' Chen forecasts dollar-yen range of 152-157
Digital FinanceMacroAnalyst
Chen of Sanword Securities forecasts a range of 152.00 to 157.00 for the dollar-yen this week. With the Federal Open Market Committee meeting on the 15th and 16th and the Bank of Japan's monetary policy meeting on the 17th and 18th, both expected to raise rates, the pair looks set to test the upside, he says. The August U.S. consumer price index released on the 11th showed the core index, which excludes volatile food and energy, rising 0.3% month on month, beating expectations and strengthening the view that the Federal Reserve will go ahead with a rate hike at the FOMC. The BOJ, meanwhile, is expected to raise its policy rate from 1.0% to 1.25%, as July nominal wages, or total cash earnings, rose 4.7% year on year, the fastest in about 30 years, and other data supporting a hike keep piling up. Chen says that if the Fed does not raise rates, with WTI crude above 100 dollars a barrel, there is no hope of quelling inflation, and the market would judge the hike to have been postponed, spurring dollar buying. On the other hand, he notes that a 0.25% BOJ hike is already priced in, and that if the statement or Governor Ueda's press conference contains no mention or hint of further tightening, yen selling could reignite, and that if the stance toward additional hikes weakens, the dollar-yen could rise to around 158, where the 200-day moving average sits.
