Currencies
Yen Faces Headwinds That Damp Any Advantage From Fed’s Big Cut
- Capital outflows, real yields and positioning weighing on yen
- Long positions at risk of being unwound should rally stall
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The yen is facing a multitude of negatives that seem to be outweighing any advantage it’s gained from the bumper Federal Reserve interest-rate cut.
Japan’s currency stayed under pressure Tuesday morning in Tokyo, after the worst week in almost five months. Chair Jerome Powell’s caution about the pace of easing raised the question about whether yield differentials will narrow enough to support the yen, even after the Fed slashed its policy rate by half a percentage point. Meanwhile, Bank of Japan Governor Kazuo Ueda appeared to be in no rush to hike rates again.