USD/JPY: Scope for a drop back towards 138 over coming months – Rabobank

On a one-day view, the Yen is the best performing G10 currency. Economists at Rabobank analyze JPY outlook.

Changes in BoJ policy will not happen quickly

Fundamental factors are moving in favour of inflation in Japan. Last week the government recommended a 4% increase in the minimum wage and the spring Shunto wage round produced the highest increase in pay in around three decades. There is also more evidence that firms are more willing to pass on price rises to consumers. 

Changes in BoJ policy will not happen quickly. However, on the assumption that hopes remain that the BoJ can creep towards a gradual move away from extremely accommodative policy, we see the potential for USD/JPY to move back towards 138 on a three-to-six-month view.