OCBC strategists Sim Moh Siong and Christopher Wong highlight that Japanese Yen underperformed despite a softer US Dollar, as muted BoJ communication left it isolated. Markets have pared April BoJ hike expectations, yet OCBC still sees an April rate hike as likely. They stress that persistent JPY weakness is lifting inflation expectations, steepening JGB curves and raising concerns the BoJ is falling behind the curve.

BoJ pressure builds as Yen weakens

"JPY underperformed overnight, standing out as the only major G10 currency that failed to benefit from the late USD pullback, after limited support from BoJ communication. "

"While the April BoJ meeting is critical for the JPY, Governor Ueda offered no clear guidance in his brief remarks. As a result, markets have pared April hike expectations to around 8bp from 12bp a week ago. "

"Despite the absence of overtly hawkish signals, we still see an April rate hike as likely. The case for containing excessive JPY weakness—either through direct FX intervention or further policy normalisation—is strengthening, not least to help stabilise the JGB market."

"JPY depreciation is lifting inflation expectations and steepening the JGB curve, sharply contrasting with the post‑February curve flattening seen in the US, Europe and the UK. Market unease is growing that the BoJ risks falling behind the curve."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)