USDJPY Has Decoupled From Rates — The 270bp Gap
Research preview
USDJPY has stopped tracking the rate differential that explained it for a decade. The break From 2013 to 2024, USDJPY and the US–Japan 10-year differential moved almost one-for-one. The differential peaked near +420bp in 2024, with USDJPY around 160. It has since fallen to roughly +150bp — about 270bp of carry unwound. USDJPY is still near 158. In candles On rate differentials alone, the yen is cheap to rates. The market is pricing either persistent central-bank caution — hikes slower than the bond market implies — or a structural risk premium driven by intervention risk, fiscal policy and energy-import costs....
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