Deutsche Bank: The yen is expected to weaken, and the Bank of Japan is predicted to raise interest rates again in December

Deutsche Bank strategist Volkmar Baur wrote that the yen will maintain a structurally weak trend after briefly strengthening, and the Bank of Japan is expected to raise interest rates again in December. The yen will weaken again because a real rate hike cycle apparently won't come, and next year USD/JPY will strengthen. The Bank of Japan is very willing to raise interest rates again, but considering the dovish comments from the deputy governor previously, it was too early to raise interest rates in September, and the October meeting is close to U.S. election day which isn’t an ideal timing; therefore it's predicted that they'll increase rates in December. In terms of USD/JPY exchange rate, if we observe market differences on US-Japan policy rate expectations, we would find that exchange rate was slightly overvalued before while adjustments on rate expectations have already prompted currency correction.