USD/JPY flows: Jawboning Arrives at 160

As USD/JPY flirts with the 160 level, we heard Japan FM Katayama suggesting readiness to respond to FX. It of course did little to reverse the trajectory of USD/JPY, barely keeping the pair under the figure. Fundamentally, we do see wage gains exceeding expectation at 3.5% y/y and could contribute to stronger inflation in a medium run. If such persist, the rate expectation could change from the currently 1% terminal rate we are seeing to as high as 2% but only time will tell.

USD/JPY is trading 0.06% lower at 159.92.