Japanese Yen: BoJ repricing supports gains against US Dollar – MUFG
MUFG’s Derek Halpenny highlights renewed Japanese Yen strength as markets price in more Bank of Japan hikes following recent comments from Takata and Ueda.
The Japanese Yen has shown renewed strength against the US Dollar, as markets price in additional Bank of Japan (BoJ) rate hikes following comments from Takata and Ueda. Derek Halpenny, from MUFG, suggests that the current BoJ pricing appears stretched, highlighting growing US influence through EUR/JPY intervention and political pressure.
Upcoming US data, such as Non-Farm Payrolls (NFP) and Consumer Price Index (CPI), could contribute to USD/JPY downside momentum and carry-trade unwinds. The yen continues to be the top performer among the G10 currencies, with the BoJ hike pricing now ranging from 30 basis points (bps) to 100bps over the next year. While a hike above 25bps is still considered plausible, it is not seen as highly likely.
A hike this month would only confirm a shift in policy from every six months to every three months. Factors contributing to the yen's strength include weak US data, such as JOLTS and ADP reports, as well as a potential increase in domestic asset purchases by Japanese investors. USD/JPY is trading below 156.00 in the second half of the day on Thursday, with hawkish BoJ expectations and intervention risks continuing to support the Japanese Yen.
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