Nomura: Federal Reserve policy is expected to dominate USD/JPY movement

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Golden Financial reports that on June 18, Takahide Kiuchi, an economist at Nomura Research Institute, said that future Federal Reserve policy is likely to become the main driver of the USD/JPY outlook, even though the Bank of Japan recently raised interest rates, with USD/JPY still staying above 160. Takahide Kiuchi noted that the latest Federal Reserve dot plot has not yet fully reflected the impact of progress in the US-Iran negotiations on oil prices falling. While lower energy costs are expected to quickly bring down US retail gasoline prices, the future path of Federal Reserve policy will still mainly depend on the trend of non-energy prices. “If the Federal Reserve reduces communication about future monetary policy under Wash’s leadership and lowers transparency in financial markets, market volatility may increase,” he added. (Jin10)
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