A turn in JPY may have broader implications – AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, suggests that a turn to a consistently weaker JPY may have significant global market implications. 

Key Quotes

“For one it may reverse some of the broad weakening influence in the USD we have seen this year.

It may contribute to some upward pressure on global bond yields, but this may be counteracted by a lower NIRP preventing a big overall rise in Japanese or global yields.

It may reduce some of the scramble for yield driving funds into EM and commodity currencies, especially if the USD more broadly appears stronger and reconnects to some extend with the higher US yield advantage this year.  However, it may also revert attention from funding high yield investment from selling USD towards selling JPY.

The performance of the EM and commodity currencies may also depend on the evolving outlook for US rates which are back to being data dependent.”