Japanese Yen remains the worst-performing G10 currency as FX markets ignore higher domestic yields and expected Bank of Japan rate hikes.
The Japanese Yen (JPY) continues to underperform among G10 currencies, despite rising domestic yields and anticipated Bank of Japan (BoJ) tightening. The 10-year Japanese Government Bond (JGB) yield is projected to climb toward 3.50% as the BoJ is expected to hike rates by another 75 basis points by mid-2025.
This contrasts sharply with the Yen’s performance a year ago, when coordinated Ministry of Finance (MoF) interventions drove a 3% gain against the USD. Currently, USD/JPY trades above its 200-day moving average near 159, while EUR/JPY hovers within 2.3% of all-time highs.
FX markets remain unconvinced by the Yen’s yield advantage, even as Japanese 10-year yields are poised to exceed German Bund yields. Dip buying has supported USD/JPY, underscoring persistent weakness in the currency.