FXstreet.com (Barcelona) - Undoubtedly, the Japanese yen grabbed
all the attention of the FX community this week, after LDP leader -
and most likely the new PM after the elections in December -
commented his preference for a weaker yen and a higher inflation
target.
Experts do express different views regarding the next direction of
the Japanese safe haven:
For example, Lee Hardman, Currency Economist at BTMU, affirms "We
remain sceptical that recent yen weakness can be sustained in the
near-term given both the scope for BoJ easing to still disappoint
more aggressive expectations now, and BoJ easing will also be
offset by further easing from other major central banks ahead
dampening its yen negative impact."
Jane Foley, Senior Currency Strategist at Rabobank, remarks that
the effectiveness of further monetary action would contrast with
the soft performance of JGBs in the present year, extremely low
interest rates and a scarce demand for credit "The ongoing nature
of weak credit demand in Japan has been associated with an
inability of very accommodative policy over a very long time frame
to inject inflation back into the Japanese economy. While we judge
that verbal intervention from various officials this year has
tempered demand for the yen, given the current cautious tone in the
market on the back of US fiscal cliff worries, recession and crisis
fears in the Eurozone and Middle Eastern tension, we expect that
USD/JPY will be holding lower levels by year end on the back of
safe haven demand as the possibility that Fed QE fears will have
risen".
Senior Analyst at Danske Bank, M.Helt, commented "a change of
government also implies a higher probability of a weaker JPY… We
expect BoJ to continue to deliver considerable monetary easing and
expect the yen to weaken significantly against both USD and EUR
over the coming six months time".
Analyst Geoffrey Yu at the Swiss UBS, reiterated the bullish
outlook on the cross, "the sharp rally yesterday stalled just below
the resistance offered at 81.49. A break above would expose 83.30.
Any setback should be limited in the short term. Support lies at
80.12".