Japanese Yen: BoJ hike expectations support JPY against US Dollar – MUFG
MUFG’s Derek Halpenny and Lee Hardman report that Japanese government bond yields are rising despite weaker-than-expected GDP, as markets focus on prospects for further Bank of Japan rate hikes.
MUFG analysts Derek Halpenny and Lee Hardman report that despite weaker-than-expected GDP figures, Japanese government bond yields are on the rise. This is due to market participants focusing on the potential for further Bank of Japan rate hikes. Elevated pricing for a 25 basis point hike at the September meeting remains strong, conveying around an 80% probability of a rate increase.
There has been no official pushback from the Ministry of Finance or the Bank of Japan regarding these market expectations. In addition to the stronger yen outlook, weaker US economic data and a shift in Federal Reserve expectations have also favored the Japanese Yen, helping to curb renewed selling of the currency in the short-term.
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