Will the USD/JPY fair value gap in the 151 yen area be filled?
Dollar/yen may be strong but the head may be getting heavier
Isn't there more people who want to sell?
When indicators attract buyers
I feel like sellers take profits there
After a round of selling, it repeats to rise again
Now, if it drops significantly, I want to buy
However, if held for a long time, there is a risk of a sudden plunge triggered by something
so I will trade in the short term
First, which way will the triangle consolidation break?
Two U.S. economic indicators are dollar-positive, yet the dollar/yen fell
The U.S. October Producer Price Index (PPI) accelerated from the previous month.
Items reflected in the Personal Consumption Expenditures (PCE) price index, such as portfolio management services fees, acted as upward drivers
Last week's U.S. initial jobless claims decreased, hitting a low not seen since May.
Impact of hurricanes and strikes was seen, but
this statistics suggest that labor demand remains healthy.
Watching the USD/JPY from the interest-rate differential
From the U.S.-Japan interest-rate differential, the current dollar/yen price is overvalued
The arrow shows the current position
The fair value for USD/JPY is in the 151 range
There is currently a gap
The rise is due to expectations of the Trump administration
but interest rates have a large impact on exchange rates
eventually this gap will be filled
Looking at the medium to long term, this gap
can be filled in two ways
Either USD/JPY falls and closes the gap,
or the U.S.-Japan 2-year government bond yield spread rises
and closes the gap
I think these will be the two options
The level of USD/JPY, driven by expectations of economic expansion, is
significantly overvalued relative to fair value
and the gap should be closed by a widening interest-rate differential or a decline in USD/JPY
likely
Trading will continue with an eye on the usual interest rates, but
I feel the wind may blow toward yen strength when the Trump administration takes office
U.S. 10-year yield hourly view
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