Snippet from a Goldman Sachs note on Friday, arguing that rising inflation-adjusted US yields typically weakens the yen.

As investors and traders persist in pricing solid US economic growth and the Federal Open Market Committee (FOMC) rate hiking more that has been expected there is scope for more weakness for the yen

  • We have repeatedly said that US real rates should matter most
  • the current market environment looks less favorable for significant dollar-yen downside, even in the case of a hawkish BOJ policy shift

GS add they expect the Bank of Japan March meeting will not bring anything substantive on policy change. But this won't hinder speculation of some policy move from the BOJ after Kuroida departs in April and Ueda is ushered in as new governor. This will make the yen weakness limited.


USD/JPY surged Friday but has dribbled a little lower so far this new week:

usdyen Goldman Sachs weakness 27 February 2023