USD/JPY rates to stay under downward pressure - MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that essentially, the factors influencing the direction of the yen haven’t changed in the aftermath of the BoJ and government policy announcements.

Key Quotes

“There will very likely be no real change to investor expectations on inflation. Yes, the 10-year JGB yield has jumped from close to -0.30% to -0.08% today but this we believe is more a reflection of disappointment after the BoJ refrained from increasing JGB buying and a position adjustment rather than a sustained shift in inflation/growth expectations. Higher real yields in Japan and the rapidly expanding current account surplus will keep the USD/JPY rate under downward pressure.”