USD/JPY: Decreasing risks support an appreciating yen - CIBC
|Analysts at CIBC, see the USD/JPY pair moving lower over the next months and forecast it will drop to 106 during the third quarter and to 104 over Q1 2019.
Key Quotes:
“With G3 central banks remaining on hold and trade and Brexit tensions continuing to dissipate, risk has improved. This has caused the trade-weighted yen to decrease by around 5% from highs seen at the start of the year. Inert central banks have pushed volatility lower, which has weakened safe haven assets including the yen. With little risk events on the immediate horizon, sustained low volatility will put upwards pressure on cross yen pairs in the near-term.”
“Over the longer term, we look for JPY to remain one of the cheapest G10 currencies, especially considering the rally in global rates narrowing rate spreads. With the consumption tax scheduled for the fall, the BoJ will be on hold for the rest of the year. Regardless, the next move remains biased towards tightening come 2020. This is because, despite the domestic economy exhibiting some weakness at the start of the year, growth is expected to rebound, attributed to improving external demand and a recovering Chinese economy. This will effectively support the JPY in the longer term.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.