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17 Apr 2015
Credit Suisse: USD/JPY expected to move towards 122, 3M view– eFXnews
FXStreet (Barcelona) - The eFXnews Team notes Credit Suisse explains that lowering Fed hike expectations and improving Japanese BoP has led them to revise their 3m target for USD/JPY lower to 122.
Key Quotes
“The recent downdraft in JPY implied volatility, improvement in Japan’s balance of payments and lower Fed hiking expectations lead us to trim our USDJPY 3m forecast from 125 to 122. And after all, if the guru behind Abenomics is openly suggesting that USDJPY may have run far enough for now, the market may see that as a validation of the idea that upside is limited.”
“Nonetheless, we retain our 12m 127 forecast as the structural home bias of Japanese investors continues to unwind – supported by the BoJ crowding out of JGB investors and the GPIF reallocating into foreign assets – outweighing any oil and yen weakness related gains in the BoP (Onward and outward). Fed rate hikes over that time horizon will also help”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“The recent downdraft in JPY implied volatility, improvement in Japan’s balance of payments and lower Fed hiking expectations lead us to trim our USDJPY 3m forecast from 125 to 122. And after all, if the guru behind Abenomics is openly suggesting that USDJPY may have run far enough for now, the market may see that as a validation of the idea that upside is limited.”
“Nonetheless, we retain our 12m 127 forecast as the structural home bias of Japanese investors continues to unwind – supported by the BoJ crowding out of JGB investors and the GPIF reallocating into foreign assets – outweighing any oil and yen weakness related gains in the BoP (Onward and outward). Fed rate hikes over that time horizon will also help”
This content has been provided under specific arrangement with eFXnews.