USD/JPY: The Japanese yen is set to remain strong – Danske

Analysts from Danske Bank preserve their expectations for in addition energy in the Japanese yen. They forecast USD/JPY at 103.00 in a month, 102.00 in three months and at one hundred in twelve months.

Key Quotes:
“To take JPY closer to 110, we would want a fabric alternate in US nominal quotes and/or international commodity prices. However, oversupply in the oil market stays a applicable factor, which limits upside dangers to oil and accordingly draw back danger to JPY (Japan is a internet importer). We do now not see US 10Y rising lots above 1%, currently.”

“Moves in international hazard aversion, commodities and home fiscal response have thrown USD/JPY again and forth. Notably, nominal US activity prices have remained mostly unchanged amid rising inflation expectations and oil expenditures have consolidated. In turn, the JPY has been left to an ‘Asia factor’ and the decline in actual rates, which has been USD negative. These elements are for this reason USD negative/JPY positive. Recently, rising actual charges have led USD/JPY to go from 103 to 104.”

“We hold our expectations for in addition JPY strength. This power is now not due to a terrible view on international chance sentiment however instead that we assume Asian outperformance to assist JPY versus USD. Thus, the key hazard to our profile will become a shock that steepens the US yield curve and/or raises oil costs into the excessive USD60s per barrel for Brent. Jointly, on the returned of this, we see little upside chance for EUR/JPY.”

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