US Markets

BUZZ-COMMENT-Dollar may fall to 100 vs yen as Fed uncertainty haunts markets

Credit: REUTERS/© Shohei Miyano / Reuters

USD/JPY fell to seven-week lows on Thursday, extending recent losses in what appears to be a broader retracement of its 2011 to 2017 rise that could push it down to 100 as uncertainty mounts over the Fed's ability to find new ways to stimulate the U.S. economy.

Sept 17 (Reuters) - USD/JPY fell to seven-week lows on Thursday, extending recent losses in what appears to be a broader retracement of its 2011 to 2017 rise that could push it down to 100 as uncertainty mounts over the Fed's ability to find new ways to stimulate the U.S. economy.

If July's 104.195 low on EBS and 2019's 104.10 spike low give way, March's 101.18 spike low and converging longer-term down channel bases near 100 by January would become potential targets.

Though the Fed and the BOJ say they are ready to ease more if needed, markets are beginning to doubt whether either of them has much scope left beyond monetizing debt.

The Fed's shift to near-zero rates this year gutted the dollar's Treasury-JGB yield spread advantage while global uncertainty favors the safe-haven yen.

That leaves the reduced Treasury-JGB yield spreads to weigh on USD/JPY, which is still overvalued on a REER basis.

And Japanese prime minister Yoshihide Suga could have even less political goodwill to verbally intervene against USD/JPY weakness than his predecessor, Shinzo Abe, who had a strong personal relationship with U.S. President Trump.

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(Randolph Donney is a Reuters market analyst. The views expressed are his own.)

((Randolph.donney@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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