USD/JPY: Yen to keep falling unless BOJ reviews YCC settings – Goldman Sachs

Analysts at Goldman Sachs believe that the decline in the Japanese yen is likely to continue amid a dovish Bank of Japan (BOJ), adding that any forex intervention will have little to no impact on stemming the yen falls.

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Key quotes

“The depreciation of the yen will continue as long as the BOJ sticks with its loose monetary policy and its yield curve control and US yields continue to rise.”

“We find it hard to see intervention driving a sustained appreciation without any shift in yield curve control expectations.”

“With risks to yields still skewed to the upside, FX intervention seems likely to be less effective.”

“There is a high risk of intervention. But says yen strength will come if the BOJ reviews its YCC settings and the rate differential to the US drops by 40 or bps.”