USD/JPY: Limited upside potential for the Yen in the near term – Commerzbank

Inflation rises in Japan. Economists at Commerzbank discuss BoJ's policy outlook and its implications for the Yen.

Prices in Japan are rising

“Prices in Japan are rising. As a result, some analysts expect another increase in the 10-year Japanese government bond yield target as early as this summer, effectively pushing up long-term interest rates in Japan. However, USD/JPY levels around 140 suggest that this is (still) a minority view.”

“As long as the BoJ continues to signal a wait-and-see approach to gain more certainty about the sustainability of inflation dynamics, high inflation will erode the Yen's purchasing power. As a result, we see limited upside potential for the Yen in the near term.”