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1 Feb 2016
Expect USD/JPY to rise to 123 in near term – Goldman Sachs
FXStreet (Mumbai) - Analyst at Goldman Sachs argued that USD/JPY could rise to 123 in near-term largely on the back of divergent monetary policy divergence and on stabilization in risk-sentiment.
Key Quotes:
“This week JPY net longs increased another $1.3bn to $5.3bn. This positioning – the largest net long positioning since February 2012 – reflects data ahead of the BoJ meeting on Friday, at which the BoJ surprised by introducing a negative interest rate of -0.1%.”
“We have long argued that weakness in price dynamics in Japan, plus the resolve of the BoJ to achieve its inflation mandate, would lead to a lower JPY vs the USD through monetary policy divergence. We expect $/JPY to rise to 123 in the near term and continue to forecast 130 in 12 months.”
“Three weeks ago, JPY net positioning switched from net shorts to net longs for the first time since 2012 amid worries about China, and net long positioning has continued to climb higher in the subsequent three weeks.”
“However, we believe the combination of stable fixes from China, a resolute and confident Fed, and easing from both the BoJ and ECB (expected in March) will contribute to stabilization in risk sentiment.”
Key Quotes:
“This week JPY net longs increased another $1.3bn to $5.3bn. This positioning – the largest net long positioning since February 2012 – reflects data ahead of the BoJ meeting on Friday, at which the BoJ surprised by introducing a negative interest rate of -0.1%.”
“We have long argued that weakness in price dynamics in Japan, plus the resolve of the BoJ to achieve its inflation mandate, would lead to a lower JPY vs the USD through monetary policy divergence. We expect $/JPY to rise to 123 in the near term and continue to forecast 130 in 12 months.”
“Three weeks ago, JPY net positioning switched from net shorts to net longs for the first time since 2012 amid worries about China, and net long positioning has continued to climb higher in the subsequent three weeks.”
“However, we believe the combination of stable fixes from China, a resolute and confident Fed, and easing from both the BoJ and ECB (expected in March) will contribute to stabilization in risk sentiment.”