📝See BoJ Delivering Another Hike Later This Year: MUFG

We expect the BoJ to stick to a gradual pace of monetary tightening and deliver another rate hike later this year. The weak yen is one factor which could encourage the BoJ to speed up the pace of rate hikes but there was no strong indication over the timing of the next hike at today’s policy meeting. The yen’s failure to strengthen on the back of today’s BoJ rate hike will keep pressure on Japan to intervene again to provide support.

As we highlighted in yesterday’s FX Daily Snapshot, leveraged funds have been ramping up short yen positions over the past month which will add to concerns that speculative selling is driving the weaker yen. The US-Iran deal to reopen the Strait of Hormuz should help to ease fundamental selling pressures for the yen by lowering energy prices and dampening expectations for Fed rate hikes. - MUFG