Is the Bank of Japan preparing a rate hike in March? MUFG Bank economists analyze the outlook for the Japanese Yen (JPY) after the Yen weakened 0.3% last week against the US Dollar (USD).
BoJ's March rate hike is undervalued
We believe that the Bank of Japan's confidence in wage increases is strengthening and, if they are influenced by the information they receive, they may very well decide to raise rates in March. The level of the Yen could also play a role. Conditions are ripe for carry and if global risk and low volatility conditions continue, there is a high probability of further upward moves in USD/JPY. But confidence in wage growth is certainly rising and that means the fundamental reasoning for an increase looks more compelling.
A rate hike in March seems more likely and the risk seems undervalued.
Although USD-related issues are key for USD/JPY, a rate hike would certainly spur some JPY buying..
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
