In the view of the analysts at Scotiabank, the yen is likely to strengthen further, which could see USD/JPY falling as low as 102.00 in the coming months.
Key quotes
“The yen to show strength amid favorable real yield differentials, diverging growth outlook in the US compared to the rest of world, positive technical and seasonality, August has been the second-best month for the Japanese currency since 1994).”
“We think the charts point to a USD decline to 104 at least and suggest a potential for the decline to reach 102 in the next 1-2 months.”
“This would approximate to the low point of the “dollar smile” framework (where the USD under-performs amid improving prospects ex-USA, risk assets are supported, and liquidity tensions are absent.”
Share
