According to Jin10 Data, Commerzbank said that the yen may give up its recent gains as the market may digest expectations of US interest rate cuts, but it will be more difficult to digest expectations of further interest rate hikes in Japan.
Commerzbank currency analyst Volkmar Baur said in a note that Monday's market turmoil led to a rise in bets on U.S. rate cuts being seen as overdone, meaning those expectations could be adjusted.
Meanwhile, data on Tuesday showed Japanese households remain cautious and will struggle to boost aggregate demand enough to sustainably reach 2% inflation, making it difficult for the Bank of Japan to achieve its wish of a continued rate hike cycle.