Yen is entering the turbulence territory
Yesterday’s US inflation data spurred market expectations that the Fed will raise rates by 100 points at the end of July, although about a month ago, Powell called a 75-point increase abnormal.
The revision in expectations for monetary policy of the US central bank again highlighted the contrast with Japanese monetary policy and triggered a new momentum of yen weakness.
The USDJPY is already up to 139.20 at the time of writing, the highest since September 1998. But even then, almost 24 years ago, it was a turbulence zone, where the pair spent less than three months, making a quick reversal in the backdrop of a flaring financial crisis in Russia. Even earlier, in 1990, the USDJPY spent about half a year above 140, but then the dip below was a recovery of the long-term downward trend.
