Dollar bulls maintain upper hand vs yen
July 5 (Reuters) -A modest reprieve for the yen to close out the week with the move in U.S. rates providing much of that relief in the low-yielding currency. Though, despite topside in USD/JPY stalling ahead of the 162 handle during the middle of the week, the outlook remains favourable for the dollar to continue gaining against the yen.
With the dollar’s substantial yield advantage and U.S. stocks hovering at all-time highs, the yen is among the least likely alternatives to the U.S. currency. As such, dip buying should keep USD/JPY downside limited for the foreseeable future.
Elsewhere, while payrolls were somewhat of a mixed bag, the report has ultimately prompted little in the way of a change in the Federal Reserve’s policy outlook.
Markets continue to price in an 80% chance that rates will be lowered at the September 0#FEDWATCH.
Although, given the close proximity that the meeting would be to the U.S. election, there is perhaps less certainty than what is currently implied by the rates market.
In any case, dollar will likely continue to perform well against the yen. Sure, there is a risk of intervention, but the moves are unlikely to be considered excessive unless there was a short and sharp move to 164-165.
For more click on FXBUZ
Fed watch today https://tmsnrt.rs/3VQCpUj
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
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