RBC says the 125 year-end median forecast for USD/JPY reflected in the most recent Bloomberg survey suggests the market is skewed to heavily one-way.
“Risk in FX markets is rarely as asymmetric as this implies”
RBC year-end target is the other way, at 140:
- says impact of higher interest rates globally will outweigh any reaction to the potential end of Bank of Japan yield-curve control
- Japan’s life insurers' plans to reduce their holdings of currency-hedged foreign bonds will also weigh on the yen over time
“In the longer-term, this will drive dollar-yen higher, though we don’t rule out shorter-term bouts of selling from outside Japan, particularly around BOJ policy announcements”
“A deep US and global recession would upend our forecasts, but is not in our central forecast.”
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USD/JPY weekly chart:
