USD/JPY: Yen appreciation to continue - CIBC
|Jeremy Stretch and Bipan Rai, analysts at CIBC Capital Markets, consider that the USD/JPY will likely move lower over the next months on the back of an appreciation of the Japanese yen. They forecast USD/JPY at 107 by the end of Q1 and 106 in Q3.
Key Quotes:
"As of December, we have seen broad-based JPY appreciation. Of course, that’s partly attributable to themes that are now causing some degree of investor uncertainty. Ongoing trade negotiations, the fall in oil prices and US equity valuations, Brexit, and China’s slowdown are key examples. While some of these concerns have eased, the JPY has remained bid to a degree.”
“Over the medium term, we remain constructive on the JPY. Although CFTC data has not been released due to the partial US government shutdown, we expect that markets likely reduced the net short JPY skew in the futures market. That is evidenced by proxies that track the non-CTA market.”
“The current macro environment will be supportive of haven currencies, as the Fed becomes less hawkish and as global growth begins to slow. Slower growth, in tandem with the Fed and the ECB decreasing liquidity will lead to higher cross-asset volatility. Surplus currencies, including the JPY, will perform on a risk-adjusted basis in such periods of higher volatility.”
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.