2 Feb 2015
USD/JPY likely to move towards 1.25 – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, maintains the bullish view for USD/JPY, targeting 1.25 levels for the pair over a 12month horizon.
Key Quotes
“The BoJ are currently pursuing a huge asset purchase programme with the aim of raising the monetary base by Y80 trn per year.”
“Kuroda has outlined the importance of keeping down long term interest rates to lessen the real cost of money and so boost demand. The low level of interest rates has also had a depressive impact on the currency. However, since it is the MoF, not the BoJ, which is responsible for exchange rate policy, the central bank will not admit that it is using the JPY as a policy tool.”
“That said, the minutes of the December BoJ policy meeting refer to the pickup in Japanese export orders and one member expressed the view that the yen’s depreciation might be starting to appear.”
“In an environment in which several other central banks are adopting fresh currency negative stimulus measures, Japanese authorities need to be wary about signalling that that yen weakness may be overdone. As it stands the JPY was the second best performing developed world currency over the past months after the CHF.”
“Historically, USD/JPY has shown a propensity to remain range bound for extended period. Last week’s comments from government officials may be an attempt to create a period of consolidation over the coming weeks.”
“That said, we maintain the view that USD/JPY is likely to move towards the 1.25 level on a 12 mth view.”
Key Quotes
“The BoJ are currently pursuing a huge asset purchase programme with the aim of raising the monetary base by Y80 trn per year.”
“Kuroda has outlined the importance of keeping down long term interest rates to lessen the real cost of money and so boost demand. The low level of interest rates has also had a depressive impact on the currency. However, since it is the MoF, not the BoJ, which is responsible for exchange rate policy, the central bank will not admit that it is using the JPY as a policy tool.”
“That said, the minutes of the December BoJ policy meeting refer to the pickup in Japanese export orders and one member expressed the view that the yen’s depreciation might be starting to appear.”
“In an environment in which several other central banks are adopting fresh currency negative stimulus measures, Japanese authorities need to be wary about signalling that that yen weakness may be overdone. As it stands the JPY was the second best performing developed world currency over the past months after the CHF.”
“Historically, USD/JPY has shown a propensity to remain range bound for extended period. Last week’s comments from government officials may be an attempt to create a period of consolidation over the coming weeks.”
“That said, we maintain the view that USD/JPY is likely to move towards the 1.25 level on a 12 mth view.”