Japan’s plunging exports and low US yields drove USDJPY below 100
In theory, September remains a live option, yet the market gives no more than a 22% chance for a rate hike to happen next month. Given the looming uncertainties at the heart of the FOMC, the odds for a Fed rate hike before the end of this year slipped below 50%.
Yen strength is once again on the headlines as Japanese exports plunged 14% on year to July. This is the tenth consecutive month of decline in Japanese exports. The stronger yen, combined to a global economic slowdown, should continue giving a headache to the Bank of Japan (BoJ).
We hear rising echoes about the possibility of injecting the so-called ‘helicopter money’, although there is no official announcement in favour of such an aggressive alternative policy option.
The USDJPY tanked below the 100 level for a second session this week. As a cherry on top, the low US yields could not give a hand to stem the decline in USDJPY. A daily close below 100 dollars could encourage a deeper sell-off in the USDJPY and weigh on the JPY-crosses.