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Forex Flash: Further JPY weakness anticipated next year – Nomura

By FXstreet.com,  December 28, 2012, 03:08:00 AM EDT

FXstreet.com (Barcelona) - Nomura FX Strategists Yujiro Goto, Yunosuke Ikeda and Jens Nordvig believe that recent political developments imply that Yen weakness will be more front-loaded than they had previously assumed 2-3 months ago.

They write, "we now expect USD/JPY to reach 90 by Q2 2013. Bold economic policy under a new cabinet led by Mr Abe will see an aggressive push towards a 2% inflation target which will encourage Japanese investors to take more FX risks, adding to structural weakness within trade and FDI flows."

Whilst USD/JPY trading around 86, its highest level in two years, they had expected the pair to edge higher but the speed has surprised them. The momentum of the rally remains strong and they have now upgraded their forecast for next year ahead, expecting it to hit 90 by mid 2013. They suspect that JPY weakness will continue in H1 2013, thanks to bolder policy responses by the Japanese Government and a structural shift in Japan oriented flow.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

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