JPY: Stuck on repeat - ING

According to analysts at ING, the factors driving the Japanese yen have been stuck on repeat for some time now.

Key Quotes

“If there's one currency set to come under short-term pressure from rising US yields it's the JPY; while this has been evident this week, we do expect the window for USD/JPY upside - beyond the 115 level - to slowly close in early 2018.”

“Despite a pick-up in the global economy, we suspect long-run Japanese inflation expectations may struggle to move higher ahead of the 2019 sales tax hike. This could see Japan fall into the familiar cycle of declining inflation expectations, real JPY rates increasing and Japanese policymakers having to accept unwanted yen appreciation. Moreover, with JPY retaining its status as the safe-haven currency of choice, any lingering risk-off concerns could also fuel a stronger currency. We look for USD/JPY to remain in the 110-115 range for 2018, with outside risks of a correction towards 100-105 area (our fair value estimates) later in the year.”