BoJ tightening and interest rate spread compression favour JPY strength ahead, in the view of economists at CIBC Capital Markets.
Spread differentials to continue to move in favour of the JPY
“We expect spread differentials to continue to move in favour of the JPY. Indeed as Japan is the largest foreign holder of UST, should long-end spreads continue to compress, we should expect a reduction in Japanese appetite for higher-yielding overseas assets, this points towards a stronger JPY.”
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