Bank of Japan rate hikes priced in, yen to weaken

The Japanese yen may weaken as the year goes on, according to Commerzbank.

Analysts at the bank say that expectations of interest rate hikes by the Bank of Japan are unlikely to provide much more additional support for the currency.

While Japan’s stronger-than-expected economic growth in the fourth quarter (data released on Monday, summary and links here) is likely to satisfy the BOJ and pave the way for further rate increases in the summer, they point out that such a move is already largely priced into the market for July.

As a result, the yen’s recent strength may have limited room for further gains.

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I can’t say I agree. Let me know your yen thoughts in the comments.

This article was written by Eamonn Sheridan at www.forexlive.com.