USD/JPY is trading close to 150.00 – BBH

USD/JPY is consolidating around 150.00, BBH's FX analysts report.

BOJ to hike rates by less than 75bps over the next three years

"Japan’s Q1 Tankan business sentiment survey reinforce the case for a gradual Bank of Japan (BOJ) normalization cycle. The all industries business conditions index printed at 15 for a second consecutive quarter, highest since Q4 2018, and points to a further recovery in real GDP growth. The swaps market still implies less than 75bps of total BOJ rate hikes over the next three years which is an ongoing headwind for JPY."

"The details of the Tankan survey showed the large manufacturing index dipped in line with consensus by 0.2 points to a one year low at 12 but the small manufacturing index unexpectedly increased by 1 point to 2 (consensus: -1)."

"Meanwhile, the large and small non-manufacturing indexes are both at their highest level since Q3 1991. Finally, inflation expectations for all enterprises rose 0.1pts over the next one, three and five years to 2.5%, 2.4%, and 2.3%, respectively."