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13 Sep 2013
Flash: USD/JPY at 110.00 within 12 months? – Goldman Sachs
FXstreet.com (Lisbon) - According to the Goldman Sachs Research Team, we remain static in our views and expect the USD/JPY to trade at 105 (3 months), 105 (6 months) and 110 (12 months).
Key quotes
“In our opinion, the USD/JPY has been essentially range-bound since early April after expectations of aggressive easing from the BoJ, which were subsequently delivered, pushed the cross above 100. The range-bound price action has occurred despite the ongoing widening of interest rate differentials between the US and Japan, which suggests the cross could trade higher.”
“Instead, moves in the cross are more closely aligned with developments in Japanese equities. In the next month or so, several key developments for USD/JPY – the potential tapering by the US Federal reserve, the expectation that the consumption tax hike will be confirmed and more details on PM Abe’s growth strategy – have the potential to push USD/JPY higher.”
“The likelihood of further easing by the BoJ at its October meeting seems remote, but easing next Spring to soften the blow from the consumption tax hike is possible. Our longer-dated forecast remains 125 at end-2016.
At that point, we expect the Fed to have started raising the Fed Funds rate but we think the BoJ will likely still be in easing mode.”
Key quotes
“In our opinion, the USD/JPY has been essentially range-bound since early April after expectations of aggressive easing from the BoJ, which were subsequently delivered, pushed the cross above 100. The range-bound price action has occurred despite the ongoing widening of interest rate differentials between the US and Japan, which suggests the cross could trade higher.”
“Instead, moves in the cross are more closely aligned with developments in Japanese equities. In the next month or so, several key developments for USD/JPY – the potential tapering by the US Federal reserve, the expectation that the consumption tax hike will be confirmed and more details on PM Abe’s growth strategy – have the potential to push USD/JPY higher.”
“The likelihood of further easing by the BoJ at its October meeting seems remote, but easing next Spring to soften the blow from the consumption tax hike is possible. Our longer-dated forecast remains 125 at end-2016.
At that point, we expect the Fed to have started raising the Fed Funds rate but we think the BoJ will likely still be in easing mode.”