The biggest mover in the FX market today is the Yen. Economists at MUFG Bank analyze USD/JPY outlook.
BoJ on course to exit negative rates but exact timing of first hike uncertain
While the exact timing of the first rate hike is uncertain, the direction of travel is clear. We expect the BoJ to exit negative rate policy in 1H of next year which should help strengthen the yen’s rebound from deeply undervalued levels.
So far the recent rebound for the Yen has been mainly driven by expectations that major central banks outside of Japan including the Fed will begin to cuts rates earlier and deeper next year helping to narrow policy divergences with the BoJ.
