1346 GMT - The Japanese yen has ample room to weaken against the dollar unless the U.S. fundamental backdrop changes materially, Morgan Stanley analysts say in a note. Ongoing Middle East tensions and the resulting rise in energy prices should keep expectations for the Federal Reserve's final--or terminal--interest rate elevated while also worsening Japan's terms of trade, they say. "Our dollar-yen fair-value model--based on U.S. terminal-rate pricing, global risk sentiment, and Japan's terms of trade--still points to around 167.00." The dollar rises 0.1% to 159.10 yen, having reached a 40-year high of 163.98 last month, LSEG data show.
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