JPY: Soft versus region despite BOJ hike case – DBS

DBS Group Research’s Chang Wei Liang observes that JPY is weakening against regional peers, with USD/JPY back toward 156, even as Tokyo inflation data support another BOJ rate hike. Political noise around BOJ appointments and potential safe-haven demand from global risk events are highlighted as key factors for Japanese Yen dynamics.

Japanese Yen lags regional FX recovery

"JPY is softening against regional trends, with USD/JPY trading back towards 156."

"Media reports this week suggest that PM Takaichi had expressed concerns over rate hikes to BOJ Governor Ueda, while her two picks to replace outgoing BOJ board members are also considered to be dovish."

"It is perhaps unwise to speculate if political considerations may influence the well-respected Governor Ueda, and hard data continue to support the case for another BOJ rate hike."

"Tokyo’s headline inflation for Feb released today shows a rebound to 1.6% y/y, in contrast to expectations for a decline."

"JPY could also be supported if market volatility picks up, with risks ranging from US-Iran tensions to AI disruptions still pertinent."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)