Live Markets: Dollar/yen has peaked, set for downtrend into 2027 - Macquarie

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DOLLAR/YEN HAS PEAKED, SET FOR DOWNTREND INTO 2027 - MCQUARIE
The yen recently sank to its weakest level against the dollar in roughly four decades, prompting Washington and Tokyo to carry out the first yen-buying joint intervention since 1998.
The impact of U.S. and Japanese intervention has now faded, leaving traders to wager that either rate hikes or another round of official buying would be needed to stem the decline.
However, according to Thierry Wizman, global forex and rates strategist at Macquarie Group, politics will do the trick.
He points to reports saying Prime Minister Sanae Takaichi now favours faster BoJ tightening, and he argues the shift is unsurprising given that her approval ratings have recently slipped over cost-of-living concerns.
“The BoJ's new fears over ‘inflationary’ yen weakness, the MoF's political motivations, and Trump's desire to not see U.S. competitiveness erode further are aligning key stakeholders behind policy tightening and a stronger yen,” Wizman says.
“We think that dollar/yen has effectively peaked and trend into 2027 is down,” he adds.
     
(Stefano Rebaudo)
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EARLIER ON LIVE MARKETS:
EUROPE BEFORE THE BELL: SENTIMENT HELPED BY DISINFLATION NARRATIVE CLICK HERE
YEN STUCK IN TWILIGHT ZONE CLICK HERE