USD/JPY to fall by the end of the year — HSBC

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HSBC economists they think the pair USD/JPY it will fall by the end of 2023 on a host of factors ranging from future BOJ policy announcements to improvements in Japan’s balance of payments and a revival of the yen’s “safe haven” status.

The recovery of the yen as a safe haven could affect the USD/JPY pair

“There are many upcoming events that could trigger a change in BOJ policy further down the line. Prime Minister Kishida will likely appoint the next BOJ governor sometime in February. Governor Kuroda will chair his last monetary policy meeting on March 10. The first tabulation of results of the Shunto (annual wage negotiations) will probably be announced around mid-March. The new governor will chair his first monetary policy meeting on April 28.”

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“Aside from the BOJ, there are other plausible developments that could push USD/JPY lower in 2023: resident investors hedging their overseas investments against foreign exchange risk; an improvement in Japan’s basic balance of payments due to the undervaluation of the JPY and the resumption of tourism; and a resurgence of the countercyclical nature of the JPY and its “safe haven” status during bouts of risk aversion (as US yields fall).”

Source: Fx Street

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