MUFG's analysis shows that this week's Fed minutes and Fed Chairman Powell's speech at the Jackson Hole Symposium on Friday could have an important impact on the trend of the dollar against the yen. Analyst Derek Halpenny mentioned that if these events lead to a decline in US Treasury yields, the yen may appreciate further against the dollar.
The minutes may reveal the Fed's expectations for the extent of the September rate cut, and this information will have a significant impact on market sentiment. If the market interprets it as the Fed's potential for faster or larger rate cuts, this will push down US Treasury yields, thereby weakening the attractiveness of the US dollar, thereby driving the yen to appreciate.
In addition, Powell's speech will also be the focus of market attention. If he hints at the Jackson Hole Symposium that the Fed is ready to cut interest rates, this may further strengthen market expectations of a weaker dollar. These factors will be critical for the short-term trend of the dollar against the yen. If the market believes that the Fed's monetary policy stance is shifting to a more accommodative stance, the dollar may weaken in the broader market, and the yen, as a safe-haven currency, may appreciate further.
Overall, MUFG's analysis shows that this week's Fed moves are crucial to the future trend of the yen. Investors need to closely monitor these events to determine whether the decline in USD/JPY will continue over a longer period of time.
