USD/JPY: The ingredients are given for a new downward movement – ​​HSBC

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According to HSBC economists, the focus is on the succession of the governor of the Bank of Japan and possible changes in monetary policywhich could translate into a renewed strength of the yen.

The improvement in the current account balance should also help

A move lower in the USD/JPY in the coming weeks will mainly depend on the outlook for the BoJ’s monetary policy change.but other more medium-term forces (such as the improvement in the current account balance) should also be helping in the background.”

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“BoJ Governor’s Mandate, Kuroda, ends on April 8, but the process of identifying his successor is likely to take center stage in February. This will keep the narrative of a possible change in monetary policy in the coming weeks, even if that change may have to wait several months.”

With the yen still undervalued (based on its actual effective exchange rate) and under-covered residents, we believe that the ingredients are given for a new downward movement of the USD/JPY.”


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Source: Fx Street

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