Following Friday's volatile action, USD/JPY gathered bullish momentum early Monday. But with Yield-Curve-Control still set to end, upward pressure on the Yen will remain, in the opinion of economists at MUFG Bank.

YCC is still set to end

“The prospect of higher JGB yields appears to us to be at least partially priced into the FX markets and the choice of Ueda as Governor, if confirmed, will not change that expectation, and there is a risk that it strengthens the expectations further. But we do not see the choice of Ueda as necessarily hugely different to Amamiya, in terms of the course of monetary policy this year.”

“Our bias was for the Yen to strengthen and that remains the case.”

“We still believe YCC is likely to end and we see Ueda as a credible alternative to Amamiya who will adopt changes to monetary policy with credibility given his time at the BoJ preceded Abenomics.”