Last week analysts at Westpac Institutional Bank argued for an ‘eventual drop below 105.50,’ not thinking it would happen in a week. Now, they think USD/JPY is set to stabilize but fresh lows are coming in next weeks.
“The BoJ should and will have no choice to throw in whatever chips left given that Japan is already in a very deep recession. One of those very obvious chips is ETF purchases given it is the part of the BoJ balance sheet that has grown the most over the last year. We would also expect to see the loans program being increased too.”
“Near term, USD/JPY should stabilise as the ECB and Fed step up, but we still expect to see fresh lows sub-103 in the coming weeks.”