MUFG is the largest bank in Japan (a 2006 merger of Bank of Tokyo-Mitsubishi and UFJ Bank) - the largest of Japan's 3 megabanks.

Analysts yen comments on their expected 103.00-111.00 range over the coming weeks:

  • USD/JPY is now trading lower than a month ago primarily reflecting the decline seen in UST bond yields. After gaining 34bps during March, the UST bond 10-year yield has declined 12bps in April. Our own correlation analysis indicates that USD/JPY is the most sensitive currency pair to movements in US yields
  • Japan-specific developments would have the potential to disrupt this correlation and while there are risks we do not see anything on the horizon that could drive JPY direction independently of developments abroad and in the US specifically.
  • A new COVID wave of infections is hitting Japan as we write with the 7-day average of daily infections up from around 1,000 in early March to 4,000 now. The potential for further restrictions hitting economic growth is rising and this could have implications for the currency.
  • However, with the BoJ scope for easing policy limited, we see the net impact of this risk as deflationary and hence for Japan, higher real yields help provide support for the yen. In essence, as history shows, weaker growth can actually provide support for the yen
  • With limited prospects of monetary easing by the BoJ we doubt the yen will be influenced much by domestic factors specifically. Of course portfolio flows will remain important but the shape of the US yield curve is more geared toward greater hedged outflows from Japan as we start the new fiscal year
  • Yield consolidation in the US should mean USD/JPY consolidation too and hence our neutral bias for the outlook