RBC thinks USD/JPY is going to 132

USD/JPY view from RBC Capital Markets

• Short yen positioning has halved over the course of 2015... "This may explain why USDJPY has failed to rally despite record outflows into foreign equities"
• "The more neutral leveraged positioning becomes, the more the balance of risks shifts toward ongoing capital outflows driving JPY down"
• But a further USD/JPY move higher will not be "fuelled by overseas investors or the domestic public sector, but rather by private sector bond investors in Japan"
• Its most likely that tightening from the Federal Reserve, not BOJ easing will drive the "next leg of JPY weakness"
• "But, the real upward momentum comes when the US rate cycle turns, and so long as our US economists maintain their expectation of a September tightening, we will maintain our aggressive end-year target of Y132 for USD/JPY"

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Japan is on holiday today (and tomorrow). USD/JPY subdued so far this morning: