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Japanese yen faces structural weakness toward 165
The bear case for the Japanese yen is driven by a Bank of Japan that remains behind the curve, widening interest rate differentials, and an ongoing natural gas terms-of-trade shock.
The argument
The guest argued that the yen is likely to trade between 160 and 165 against the dollar, with 165 acting as the new potential redline for central bank intervention. He noted that Japan is suffering from high liquefied natural gas import costs alongside a hawkish Fed policy that widens the yield gap.
The thesis, stress-tested
✓ What validates it
- ✓USD/JPY breaking past 163 toward the 165 level
- ✓Liquefied natural gas prices in Asia remaining elevated, worsening Japan's terms of trade
▸ Risks discussed
- ▸Direct currency intervention by the Ministry of Finance/Bank of Japan
- ▸An unexpected hawkish pivot or rate hike by the Bank of Japan
Hear it yourself
"The dollar wins on Carrie, it wins on economic performance, it wins on mostly on equities, and it's on the right side of the terms of trade shock. So you pull all these together and I feel like the market's finally catching up to this story."
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