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Short USD/JPY on Converging Rate Differentials, Write TD Securities

JPY
  • TD Securities write that short USD/JPY is a position for 2024, writing that relative rate differentials matter for USDJPY and these will converge next year in favor of the JPY.
  • They see the convergence happening from both sides, with the Fed cutting rates steeply in H2'24, which will ease pressure on the JPY.
  • Moreover, the BoJ will continue with its unconventional policy tightening through 2024 with YCC and NIRP being officially disbanded accompanied by a rate hike to 0.10%.

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