Dollar strength and yen outlook (with Anna, Tom)

Jane Foley expects the dollar to remain strong given Fed hawkishness and resilient US data. She sees the yen as undervalued but lacks a clear trigger for reversal; BOJ credibility is key. She notes Kevin Worsh may try to shift dovish over time but must maintain credibility.

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Rabobank 7.0
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Jane Foley 7.5

Dollar strength and yen outlook (with Anna, Tom)

dxy

Jane Foley expects the dollar to remain strong given Fed hawkishness and resilient US data, implying dollar strength in the near term.

rut

No explicit mention of RUT; inferred from cautious market tone ahead of Worsh and NFP.

Asks about Kevin Worsh's Sintra appearance and dollar impact, noting his hawkish surprise at the June FOMC.

Anna
Jane Foley

Worsh dislikes forward guidance; his tone matters more than explicit signals. He may try to introduce a more dovish model over time by examining labor market weaknesses.

His hawkish June stance was a clever credibility move given high oil prices and resilient labor data. Now that oil has fallen, he may shift the needle.
Asks whether Fed credibility/independence is restored or still an open question.

Tom
Jane Foley

Credibility is still an open question; Worsh has had only one FOMC meeting and Trump wants rate cuts, creating a high hurdle.
Asks about yen weakness at 162-163 and whether the sell-off looks overdone.

Tom
Jane Foley

The yen is undervalued given strong Japanese fundamentals (Tankan, Nikkei, semiconductor supply chains, inflation shifting retail savings). But the trigger for reversal is unclear; BOJ has a credibility issue due to slow hiking.

BOJ needs to move to a quarterly hiking schedule. Wages rising faster than inflation provides political cover. The demographic trend is inflationary and supports wage growth.

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