According to Jinshi Data, Mitsubishi UFJ believes that the Bank of Japan is increasingly likely to raise interest rates again before the end of the year, depending on Japan's economic performance and developments after the election. The upcoming Japanese election is crucial, but external factors such as the US election may affect the effectiveness of the yen's gains.

MUFG said Japanese stocks have fully recovered from their summer decline, suggesting that financial stability risks have improved, which could encourage the Bank of Japan to maintain or accelerate its rate hike trajectory. Expectations for a rate hike by the Bank of Japan could rise after Japan's upcoming general election (October 27).

This development could be a catalyst for further yen appreciation later this year. However, any potential gains for the yen could be overshadowed by a Trump victory in the U.S. presidential election, which would likely see higher Treasury yields and a stronger dollar.