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31 Mar 2015
USD/JPY might end 2015 at 123 – BAML
FXStreet (Barcelona) - Shusuke Yamada, FX Strategist at BofA-Merrill Lynch, views that investor sentiment in Japan, and BoJ’s policy might lead USD/JPY towards 123 2015-end.
Key Quotes
“A stable Abe-Kuroda reflation tag should promote policies to lower real interest rates and improve investor sentiment, which will incentivize domestic investors to sell JPY.”
“Despite JPY’s undervaluation and some improvement in the current account balance expected in 2015, we continue to expect the BoJ’s easy policy to prevent the yen from rising.”
“We forecast USD/JPY at 123 at end-2015.”
“Against our more balanced view on JPY, one clear downside risk is the BoJ’s additional easing. While our main scenario is that the BoJ stays on hold at least until the summer, this year’s wage negotiation results were solid, but not strong enough to rule out early action by the BoJ.”
“If the BoJ is to ease, expansion would be qualitative rather than quantitative. In that sense, it is more questionable whether such easing can weaken JPY substantially and sustainably, but the signaling effect should give a negative impulse for the currency.”
Key Quotes
“A stable Abe-Kuroda reflation tag should promote policies to lower real interest rates and improve investor sentiment, which will incentivize domestic investors to sell JPY.”
“Despite JPY’s undervaluation and some improvement in the current account balance expected in 2015, we continue to expect the BoJ’s easy policy to prevent the yen from rising.”
“We forecast USD/JPY at 123 at end-2015.”
“Against our more balanced view on JPY, one clear downside risk is the BoJ’s additional easing. While our main scenario is that the BoJ stays on hold at least until the summer, this year’s wage negotiation results were solid, but not strong enough to rule out early action by the BoJ.”
“If the BoJ is to ease, expansion would be qualitative rather than quantitative. In that sense, it is more questionable whether such easing can weaken JPY substantially and sustainably, but the signaling effect should give a negative impulse for the currency.”