USD/JPY should have upside potential – Commerzbank

USD/JPY eyed the 150.00 level following Shinichi Uchida’s, Deputy Governor of the Bank of Japan (BoJ), speech. Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, analyzes Yen’s outlook.

Rate hike only a positive argument for the JPY if it could be interpreted as the start of a rate hiking cycle

Shinichi Uchida, Deputy Governor of the BoJ, speaks from the heart: ‘Even if the Bank were to end the negative interest rate policy, it is hard to imagine a way in which it would continue to raise the interest rate rapidly.’

A rate hike could only be seen as a positive argument for the JPY if it could be interpreted as the start of a rate hiking cycle. However, I have been telling you for a long time that such an interpretation is nonsense. And Mr. Uchida is now telling you the same thing. Perhaps you believe him more than me.

However, when I read the comments on Mr. Uchida's remarks, my hope that the tiresome hype about the end of the BoJ's negative interest rates will die down, fades. ‘Uchida's speech confirms that the end of negative rates is just around the corner,’ one analyst, obviously a JPY bull, is quoted as saying. It seems to me that some people are hearing what they want to hear. As long as such players have yet to capitulate, USD/JPY should have upside potential.