MUFG Research sees a scope for further JPY weakness over the coming weeks.
" The US dollar has been reversing gains recorded last month. The best performing G10 currencies (click here) this month have been the high beta commodity currencies of the NOK (+5.2% vs. USD), NZD (+4.2%), AUD (+3.8%) and CAD (+2.9%); and the GBP (+2.5%). The commodity currencies in particular have now more than fully reversed their losses from last month. In contrast, the EUR, CHF and JPY have still not reversed last month’s losses," MUFG notes.
"In a clear sign of JPY specific weakness it is the only G10 currency that has extended losses for the second consecutive month as it has weakened sharply across the board. The JPY has been hit hardest by the sharp adjustment higher in global yields and energy prices since the summer. The more recent reversal in USD performance has coincided with the rebound in global equity," MUFG adds.