A leading US bank calls for Fed hold in 2025- how will the USD/JPY react to that ?

Since an earlier update here on the USD/JPY, the dollar has dipped below the 147 handle, but not for long and not by that much. The low seen was set at 146.93, but it has just bounced from that low now. That bounce is far from conclusive though at this stage. News just emerging a moment ago has come from the leading US banking giant, Morgan Stanley. They have just called for the Fed to hold monetary policy for the rest of the year and not reduce rates until March 2026. That is in contrast to their prior call for 2-3 rate cuts this year. Look, there can be little doubt why MS have changed their tune and they may yet be joined by others. The reason is obvious- significant price increases across the US economy due to these tariff measures. At the same time that is not to say MS are correct in their assumptions on that, perfectly understandable as it is. All this said US yields are lower this morning and that is denting the wider dollar and not just the USD/JPY. Indeed, despite bouncing somewhat, the USD/JPY may well ignore this even if it becomes the norm from leading peers. That is all about risk aversion and potential repatriation of Japanese US cash and bond and equity investments. If that kicks in dramatically then US monetary policy on hold will make no difference whatsoever. More to come on all that folks. The USD/JPY is not out of the woods by any stretch, currently trading at 147.15