Mitsubishi UFJ Financial Group strategist Lee Hardman says the yen is unlikely
to mount a meaningful rebound despite energy prices falling after a temporary
US–Iran peace accord. Ahead of the Bank of Japan policy decision on Tuesday,
positions betting on a weaker yen have continued to build; a 25bp rate hike is
fully priced and is unlikely on its own to reverse yen weakness, encouraging
further yen shorting. He adds that if energy prices fall further and markets
pare back expectations for US rate hikes, any additional Japanese measures to
support the yen would be more effective.
