MUFG Research discusses the JPY outlook and sees a scope for a move towards 140 in USD/JPY over the coming weeks.
"Last week, a week when the 10yr UST bond jumped 30bps on Monday and Tuesday, was another big test that the BoJ again passed and it seems the BoJ will only alter the framework or levels of YCC at a time of their choosing. This most recent passing of the test for the BoJ has now opened up a window of renewed JPY selling with the obvious next target of 140.00 quickly coming into sight," MUFG notes.
"It is likely investors will look to see where in fact the threshold for resisting JPY weakness through intervention truly is. Investors will likely conclude now that it lies somewhere above the 140.00-level opening up scope for further JPY selling in the coming days," MUFG adds.