💹 USD/JPY: Downside Risks Becoming Increasingly Clear
— Policy Expectations in Japan and the U.S. Reverse Simultaneously, Narrowing the Rate Differential**
1. USD/JPY: Diverging Policy Directions Increase Downside Pressure
In today’s overseas session, the environment calls for heightened caution over further downside in USD/JPY.
■ BOJ: December Rate-Hike Expectations Surge
Governor Ueda signaled a clear shift in stance, stating:
-
“Policy adjustments will be discussed at the December meeting”
-
“A gradual reduction of monetary accommodation is appropriate”
-
Concerns over “the negative inflationary impact of yen depreciation”
As a result, market expectations turned sharply:
-
Previous view: First rate hike in January
-
Current view: December hike now highly plausible
The JGB market is already pricing in a near-term rate hike.
■ U.S.: December Rate-Cut Expectations Jump Sharply
-
Post-FOMC minutes: Rate-cut probability 35%
-
Now: 87.6%
Japan potentially hiking while the U.S. moves toward cutting
→ Japan–U.S. yield spread narrows sharply
→ A structural bearish factor for USD/JPY.
■ Tokyo Session: Sharp Drop to Mid-155s
During Tokyo hours, USD/JPY broke below 156 and fell toward 155.40.
If U.S. PMI or ISM prints weak once NY opens,
a renewed test of sub-155 becomes increasingly likely.
2. Europe–U.S. Data Flood: ISM Manufacturing Is the Key Event
■ Europe (mostly final readings)
-
France/Germany/Eurozone PMI final
-
Turkey GDP
-
Switzerland retail sales
-
UK consumer credit & M4
European surprises may move the euro and indirectly affect USD/JPY via broad USD flows.
■ United States
-
ISM Manufacturing (Nov)
Forecast: 49.0 (Prev: 48.7)
Weak ISM → Stronger rate-cut expectations → USD selling → USD/JPY downside
3. United Kingdom: Weak Household Data Boost Rate-Cut Expectations
Recent UK data came in softer:
-
Consumer credit slowed (below forecast)
-
Mortgage lending decelerated
→ High rates are clearly hitting households.
However:
-
Consumer credit YoY: +7.2%
-
Mortgage approvals: 665k (above post-COVID average)
The economy is slowing but not in recession,
leaving the BOE in a tight spot between inflation concerns and household stress.
4. U.S. Dollar Index Near Lows Not Seen Since Nov 17
The DXY is trading in a weak 99.28–99.51 range.
Main driver: sharp USD/JPY decline
-
USD weaker vs EUR
-
USD stronger vs GBP
→ Mixed across pairs, but overall USD bias remains lower
DXY: 99.34 (-0.12%)
5. Other Headlines (UK/U.S.)
-
BOE’s Dhingra to participate in panel discussions
-
PM Starmer to deliver remarks in London
-
Fed enters blackout period until Dec 11
-
Cyber Monday headlines may influence consumer sentiment
✔ Summary: Downside Bias in USD/JPY Has Become Increasingly Clear
Bearish Drivers
-
BOJ December hike expectations surge
-
U.S. December rate-cut expectations accelerate
→ Yield-spread compression hitting USD/JPY directly
Event Risk
ISM = key turning point
-
Weak ISM → test below 155
-
Strong ISM → short-term rebound toward upper-156s
⭐ Medium-Term Outlook: Rebounds Likely to Be Sold
Even if USD/JPY bounces, the medium-term bias remains downward, because:
-
Yield spread is set to keep narrowing
-
Policy-shift expectations are now a dominant market theme
-
Intervention fears cap the upside
-
Seasonal real-demand yen buying increases into year-end
➡ Medium-term USD/JPY likely to remain a “sell-on-rally” market.
