Governor Kazuo Ueda has indicated that an interest rate adjustment might be forthcoming, yet uncertainty about its timing casts a shadow over market confidence.
Despite a softening yen, the latest Jibun Bank Services PMI showcases Japan's economic resilience, driven by increased orders and a robust labor market.
Persistent inflation and rising production costs bolster arguments for the Bank of Japan to consider monetary tightening, potentially offering support for the yen in the medium-term.
Escalating geopolitical risks could enhance yen demand, yet the increase in U.S. Treasury yields compared to subdued Japanese yields continues to exert downward pressure on the currency.
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