USD/JPY seen steady near 156 – DBS

USD/JPY is expected to hover around 156 as Japan’s budget lands broadly in line with expectations, while firm Tokyo inflation reinforces the BOJ’s gradual tightening path, DBS’ Senior FX Strategist Chang Wei Liang notes.

Japan budget viewed as mildly expansionary

“USD/JPY should hold steady around 156, with markets seeing Takaichi’s supplementary budget as expansionary but still within expectations. A frostier relationship with Beijing of late may cool Chinese tourist inflows into Japan, but this should not impact the JPY significantly.”

“Meanwhile, Tokyo CPI inflation in November came in at 2.7%, and should give confidence to the BOJ’s stance of gradual rate hikes.”