Money should flow into Japanese government bonds, including from foreign investors. It wouldn't be surprising for the recent rise in yen interest rates, which had been ignored by the market until now, to garner attention.
When interest rates increase, they have a capital loss. During a time of ECB rate increases, Japanese investors don't want to buy European bonds.
Expectations of further increases in U.S. interest rates are partly encouraging investors to take money out from Asian stocks. Fund outflows have been weighing on regional currencies.
It seems that investors are beginning to think that rises in US interest rates may continue for longer than previously thought, and in line with this view they are likely to continue covering short dollar positions in the near-term.
The market has already priced in another interest rate hike in March, so the dollar's scope for further gains on rate hike expectations is limited.
The market has already priced in another interest rate hike in March so the dollar's scope for further gains on rate hike expectations is limited.