USDJPY: Ceiling at 155, with 160 still a long way off – MUFG
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USDJPY reached 150 for the first time since 1990 on the view that the Fed could raise rates to over 5% next year. Economists at MUFG Bank expect the pair to peak at the 155 level.
“If the market prices in a rise in the federal funds rate to the low 5% level through next year, we would expect the 2y UST yield to rise back to around 5%. This suggests the USDJPY could rise by five Yen from its current level of 148.”
“We forecast a near-term USDJPY ceiling of 155 given that it has already passed 150 once, is still hovering around 148, and considering the speed of its ascent over the last six-plus months.”
“The 2 April 1990 high of 160.35 could come into view if the Fed steps up its communication with the market and a terminal rate of 5.5% to 6% comes into view, but we do not expect this at present.”
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