15 Nov 2013
Flash: USD/JPY above 100 for first time in 2 months - Danske Bank
Danske Bank strategists note that for the first time in two months, USD/JPY is trading above 100.
Key Quotes
“The cross appears to be supported by improved risk sentiment and higher equity markets on the back of Janet Yellen’s dovish testimony before US Senate.”
“Moreover, the slowdown in the Japanese growth rate in Q3 might have fuelled speculations that weak data and the fact that most other major central banks currently step up their dovishness, could trigger a reaction from Bank of Japan.”
“However, in our view, the Japanese recovery remains relatively strong and we expect GDP growth to rebound above 3% q/q AR in Q4.”
“Hence, we do not expect the Bank of Japan to change its policy at this stage and consequently, we still expect USD/JPY to remain range bound in the coming months, before eventually rising on a six- to 12-month horizon driven by divergent monetary policy as the Fed starts to taper and the Bank of Japan possibly scales up on its bond purchases at some point around summer next year. Hence, we still target USD/JPY at 110 in 12-month time.”
Key Quotes
“The cross appears to be supported by improved risk sentiment and higher equity markets on the back of Janet Yellen’s dovish testimony before US Senate.”
“Moreover, the slowdown in the Japanese growth rate in Q3 might have fuelled speculations that weak data and the fact that most other major central banks currently step up their dovishness, could trigger a reaction from Bank of Japan.”
“However, in our view, the Japanese recovery remains relatively strong and we expect GDP growth to rebound above 3% q/q AR in Q4.”
“Hence, we do not expect the Bank of Japan to change its policy at this stage and consequently, we still expect USD/JPY to remain range bound in the coming months, before eventually rising on a six- to 12-month horizon driven by divergent monetary policy as the Fed starts to taper and the Bank of Japan possibly scales up on its bond purchases at some point around summer next year. Hence, we still target USD/JPY at 110 in 12-month time.”