If he USD/JPY breaks 160 in coming days, USD/CNH could follow, argues Chief FX Strategist at Societe GeneraleKit Juckes.
The rate gap between the US and Japan is too wide
“USD/CNH and USD/JPY move in tandem. The Japanese Yen (JPY) moves more, and the Chinese Yuan (CNH) moves are more controlled, but rarely move in opposite directions. This reflects both economic similarities such as geographical proximity and is changing the way the foreign exchange market works.”
“Right now, the Bank of Japan (BoJ) and the Ministry of Finance (MOF) are trying to influence the Yen, and the chances of both rate hikes and bond sales have increased, but with the rate gap between “US and Japan so big, does it matter what the BoJ does yet?”
“If USD/JPY breaks the 160 level in the next few days, preventing further Yuan weakness would be very difficult indeed.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
