Mitsubishi UFJ: The strengthening of the yen may reflect position adjustments ahead of a rate hike, and USD/JPY is expected to gradually move toward the lower 150s.

(1) Mitsubishi UFJ analyst Michael Wan pointed out that the yen has recently risen to its strongest level since the end of February, possibly reflecting some position adjustments ahead of the Bank of Japan's policy meeting next week, while subdued trading due to the US holiday has amplified market volatility. (2) The market has basically priced in a 25-basis-point rate hike at the September meeting, and attention is now shifting to how the Bank of Japan will communicate a broader rate hike path at subsequent meetings. (3) The bank expects the dollar/yen to gradually move toward the lower end of the 150 range as the Bank of Japan raises rates at the September and next January meetings; the dollar was last quoted at 153.20 yen, down 0.73%.