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Economists at Westpac are not upbeat regarding a yen appreciation as Japanese stimulus package is set to be scarce and the country will have troubles to benefit from Asian regions growth. Therefore, no changes are expected on the USD/JPY pair. 

Key quotes

“We have remained quite circumspect on the yen through 2020, and this is still the case. At the end-2021, we look for the yen to be little changed from today’s spot level, JPY 107. This is despite the US dollar index depreciating 3.0% during this time, 2.5% in 2021, and, on our expectations, as the Asian region drives the rebound in global growth.”

“Behind our forecast for yen is an expectation that, in GDP terms, Japan will struggle to take advantage of the growth in the nations around it. Meanwhile, announced stimulus measures are likely to prove insufficient to quickly and sustainably stimulate domestic demand. Japanese investors are therefore likely to look off shore in pursuit of capital gains and income as global risks dissipate.”