9 Jul 2015
USD/JPY sees 123 by 2015-end - BTMU
FXStreet (Barcelona) - Takahiro Sekido, Japan Strategist at Bank of Tokyo-Mitsubishi UFJ, expects USD/JPY to end the year at 123, and BoJ to maintain its policy steady this year.
Key Quotes
“We expect Japan’s exports to continue to recover gradually. This week, the Bank of Japan’s Sakura regional development report2 painted a clear picture of a domestic production recovery, especially in the Tokai and Kinki regions. By sector, production has been expanding for electronics parts and machinery, but mixed for general machinery and transportation equipment. I am concerned about the weakness of exports to China. That may be the reason for the mixed sentiment regarding the machinery sector. Any export recovery may be only gradual, given the global uncertainty.”
“The BoJ also described the underlying momentum of private consumption and inflation as quite positive. However, household spending was not so positive in April and May, and 2Q real GDP growth may not be so robust3. However, the BoJ thinks retail conditions may warrant optimism, given: (i) a positive asset effect by wealthy seniors and recovering middle-aged shoppers; and (ii) foreign tourists. Retailers are working on their sales strategies and actively marking up prices.”
“I maintain my earlier view, that the BoJ will not make any policy changes at least through 2015. I also maintain our house view of USD/JPY at JPY123 through the end of the year, given the global uncertainty and two-way flows surrounding the JPY. The lower bound of USD/JPY for 2Q 2015 in our view is 117.”
Key Quotes
“We expect Japan’s exports to continue to recover gradually. This week, the Bank of Japan’s Sakura regional development report2 painted a clear picture of a domestic production recovery, especially in the Tokai and Kinki regions. By sector, production has been expanding for electronics parts and machinery, but mixed for general machinery and transportation equipment. I am concerned about the weakness of exports to China. That may be the reason for the mixed sentiment regarding the machinery sector. Any export recovery may be only gradual, given the global uncertainty.”
“The BoJ also described the underlying momentum of private consumption and inflation as quite positive. However, household spending was not so positive in April and May, and 2Q real GDP growth may not be so robust3. However, the BoJ thinks retail conditions may warrant optimism, given: (i) a positive asset effect by wealthy seniors and recovering middle-aged shoppers; and (ii) foreign tourists. Retailers are working on their sales strategies and actively marking up prices.”
“I maintain my earlier view, that the BoJ will not make any policy changes at least through 2015. I also maintain our house view of USD/JPY at JPY123 through the end of the year, given the global uncertainty and two-way flows surrounding the JPY. The lower bound of USD/JPY for 2Q 2015 in our view is 117.”