USD/JPY: King dollar trend has been your friend

  • UAW strikes expand strikes against GM an Stellantis
  • China considers easing foreign stake limits to attract foreign investment
  • US Flash PMIs show manufacturing rebounds while the composite reading fell to lowest levels since Jan 2023
  • BOJ didn’t deliver much of anything. Ueda notes distance to removing negative rates hasn’t moved greatly

The BOJ kept its monetary policy unchanged and refrained from delivering a clear sign of a shift in its policy stance, disappointing some traders who were expecting improving odds of a near-term interest rate hike.  King dollar is clearly in hear to stay, unless a de-risking moment occurs from further higher-for-longer jitters. ​ Yen weakness is not going away yet and that will soon force Japanese officials to act. ​

The end of a week filled with diverging central bank rate decisions is ending and the economy that is clearly in the best shape remains the US.  The Norges and Riksbank each delivered quarter-point rate rises, while Turkey posted a massive 500bps rate increase.  The Fed delivered a hawkish skip, while the BOE, South African central bank (SARB), Philippines bank, and BOJ kept their respective rates steady.  The Brazilian central bank cut the Selic rate by 50bps and is likely only getting started with aggressive easing as policy got extremely tight over the past two years.

The big takeaway from this week is that Wall Street is anticipating that higher-for-longer is not going away anytime soon. Stocks are going to struggle with this backdrop of higher rates, a weakening global outlook, and potential risk of $100 oil.  The 10-year Treasury yield surged to as high as 4.50% and the 2-year Treasury yield peaked at 5.195%.  Friday’s bond market recovery is more likely profit-taking.  It should be fairly clear that rates are going to remain high until inflation has a clear trajectory towards the Fed’s target.  Surging oil prices and a resilient labor market will likely keep rates higher and hurt growth.  Adding to the laundry list of risks to the economy are the rising odds of a government shutdown and the UAW strike, which will undoubtedly provide a boost to wages.


The dollar-yen bullish trend has been firmly in place since mid-July.  While the bullish trend is firmly intact, it might be too early for dollar-yen to have the momentum to make a run for the 150 level. A mixed outlook from the US PMIs suggests services, the largest part of the economy is heading towards a contraction while manufacturing is stabilizing. The US outlook is going to get messier given a possible government shutdown and intensifying UAW strike. Weaker US economic data points will support slower dollar strength.

Dollar momentum will be met by Japanese jawboning, but until a policy change emerges, the yen will remain vulnerable.


Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.