The Japanese Yen (JPY) has weakened, causing the USD/JPY pair to break above the yearly high of 148.89 reached on February 5. MUFG Bank economists analyze the outlook for the pair.
The Yen will rebound heading into the second quarter
The BoJ is preparing market participants for an exit from negative rates, but no urgency has been expressed indicating that the first hike will occur in March. Our baseline forecast remains for the first hike to occur in April, but we recognize that the risk of an early exit in March has increased recently in light of the change in BoJ communication since its last meeting in January.
We remain unconvinced that the Yen can weaken much further in the near term and continue to expect the Yen to rebound heading into the second quarter as the BoJ finally moves towards exiting negative rates, based on the assumption that the upcoming salary negotiations do not disappoint.
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.
