China AI: Bernstein sees chipmakers benefiting from Nvidia scrutiny
Investing.com -- The Bank of Japan kept its policy rate unchanged at 0.5% during its latest meeting, citing ongoing uncertainty about Japan’s growth outlook. The decision was widely expected by market participants and resulted in a stable USD/JPY exchange rate.
Long-end Japanese Government Bond yields remained steady following the announcement. The central bank also revealed plans to slow the pace of its quantitative tightening program starting from April 2026.
UBS analysts note that the BoJ is taking a cautious approach to policy tightening. They believe the catalyst for narrower US-Japan yield differentials and a lower USD/JPY exchange rate will likely come from Federal Reserve rate cuts expected later this year.
Japanese asset managers and exporters’ hedging flows should provide additional support for the yen, according to UBS. These flows typically increase when expectations of yen appreciation grow.
UBS maintains a medium-term bearish view on USD/JPY and recommends selling the exchange rate on rallies. The investment bank also suggests selling upside risk for yield pickup as part of its strategy for the currency pair.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.