USD/JPY trades Japan’s 2-year now and nothing American: at weekly horizons the t-statistic reads -3.2 against 0.1 for the US 2-year, on 33 windows in 2026. I found that looking for the Japanese long bond behind a pair the Fed’s hike had taken from 153.27 on September 9 to above 156. Tokyo’s step is priced. Speculators turned net long yen at 154, and I’m looking for 156.80 by the end of September.
USD/JPY Eyes 156.80 as Markets Price the BoJ’s September Hike
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Key Points:
- USD/JPY traded the US 2-year in 2025, and it trades Japan’s 2-year in 2026. A dollar rates trade became a yen rates trade.
- The Bank of Japan decides on September 18 with its step priced in the TONA strip. My target is 156.80 by September 30, my entry is 155.00-155.50, and a reference-rate print below 154.00 retires the call.
- The Fed raised the funds rate to 3.75-4.00% on September 16, 12-0, its first increase since July 2023, and sixteen of eighteen participants see at least one more in 2026. Treasury’s 2-year rose 7 basis points to 4.74%, and USD/JPY went from 155.05 before the decision to above 156 in Tokyo the next morning.