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USD/JPY will trade lower to yearly lows between 127-128 relatively quickly — MUFG

The MUFG economists continue to consider that the most likely scenario is a drop in the USD/JPY.

Yen strength won’t be limited to the Fed

“The magnitude of this year’s budgeted easing (Fed funds future Dec 23 at 4.10%) leaves the dollar vulnerable and we are likely to see USD/JPY trading lower to year lows between 127- 128 relatively quickly.”

“Monthly Japan Trade data for February indicated that the reversal of this negative terms-of-trade shock is well underway in Japan. February’s fuel and mineral import bill amounted to 2,577,000 million The total import peak occurred in August, when natural gas prices peaked, with a total import bill of 3,423 billion yen.”

“Unsurprisingly, the Fed and falling US yields are garnering attention as a key factor driving USD/JPY lower, but the energy story will certainly add to the positive momentum in the JPY this anus.”

Source: Fx Street

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