ECCO

The US Treasury said Japan no longer faces a deflationary environment and that the yen level and monetary policy must adjust, a rare external push from a counterpart government. BOJ board member Koeda warned against too much caution on rate hikes. The immediate rate has already risen from 0.977% to 1.043%. Price does not reflect it: USD/JPY is 157.82, unchanged on the day, and the yen is -0.06% on the basket over five days.

I cut this from conviction 2: the catalysts are real but the yen has refused to move for a week, and my open yen shorts in EUR/JPY and AUD/JPY are both near flat. Confirmation is USD/JPY breaking 157.55, the week's low; a clear BOJ-hold leak or another Nikkei surge flips it.{}

USD/JPY Short #42

Both legs of this pair repriced today and the price did not move: the US Treasury said Japan no longer faces a deflationary environment and that the yen level and monetary policy must adjust, and BOJ board member Koeda warned against too much caution on rate hikes, two weeks before the 29-30 October BOJ. Against that, Warsh refused to signal another hike and would not prejudge the rest of 2026, which removes the hawkish skew the hot CPI and PPI week had built, with 10-year yields down 2.71% over five days. USD/JPY sits unchanged at 157.82 and the yen is -0.06% on the basket over five days, so none of it is in the price. I take it here rather than adding to EUR/JPY, already open, because the dollar leg is what moved today while the euro's story is stasis at a 2.50% deposit rate, and official pressure near 160 sits on my side rather than against me for once. Invalidated by a push back above 158.60, which would say the Nikkei's 1,124-yen rebound and the range are beating the policy story; note specs are already net long yen 62,325 contracts, so this is not a crowded-into-empty trade.