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- USD/JPY: Yen unlikely to weaken much further in the near term – MUFG
USD/JPY: Yen unlikely to weaken much further in the near term – MUFG
The Japanese Yen (JPY) has weakened resulting in USD/JPY surpassing the year-to-date high of 148.89 from 5th February. Economists at MUFG Bank analyze the pair’s outlook.
JPY to rebound heading into Q2
The BoJ is preparing market participants for an exit from negative rates but there was no urgency expressed to indicate that the first hike will be delivered in March. It remains consistent with our base case outlook for the first hike to be delivered in April, but we acknowledge that the risk of earlier exit in March has increased recently in light of the change in BoJ communication since their last meeting in January.
We remain unconvinced that the Yen can weaken much further in the near term and still expect the JPY to rebound heading into Q2 as the BoJ finally moves to exit negative rates based on the assumption that the upcoming wage negotiations do not disappoint.
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