- USD/JPY has firmly breached the immediate barrier of 136.60 as DXY rose.
- The Fed will continue to accelerate the pace of interest rate hikes.
- To move to a neutral stance, the BOJ also needs to raise wage rates in line with price pressures.
Market participants are turning to risk aversion amid uncertainty over comments by the leaders of the Jackson Hole global think tank. Federal Reserve Chairman Jerome Powell is still set to flash the traffic lights, as investors will get realistic clues on possible monetary policy action at the U.S. central bank’s September monetary policy meeting.
On Tokyo, as the Bank of Japan (BOJ) will stick to its prudent policy, the yen will rise even if inflation hits 3% fell further. The Bank of Japan’s prudent stance stems not only from subdued inflation, but also from a stagnant labor cost index. The Bank of Japan’s neutral stance could accelerate the economy’s troubles as it fails to raise wage rates.
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