USD/JPY: Political events a potential risk to the current 110-113 range - Danske Bank
|According to analysts from Danske Bankt, the upcoming summit meeting between PM Shinzo Abe and US president Trump (expected around 25 September) represents a downside risk to USD/JPY and Japanese equity markets.
Key Quotes:
“We expect USD/JPY to continue trading mostly sideways in the near term, with risk appetite and yields on 10Y UST the main drivers. Political events, most notably a potential summit meeting between Abe and Trump, represent a downside risk if concerns about a US-Japanese trade war increase. Taking FX positioning and the overall fragile risk environment into consideration, we see little potential for a sustained rally in USD/JPY above July’s high at 113.17 in the near term. We see the cross within a 110-113 range in the coming months, targeting 112 in 1-3M.”
“Longer term, the BoJ’s monetary policy should remain supportive for USD/JPY, driven by widening US-Japan yield spreads and continued outflows out of Japan. We target 114 in 6-12M.”
“Concerns about the Trump administration’s protectionist agenda and the case for higher inflation in the US represent downside risks to USD/JPY. Chinese growth concerns and CNY depreciation could potentially weigh on Japan’s main growth engine- exports.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.