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The announcement of Suga as Japan’s new PM is not worrying investors but there are a number of other factors that could persuade investors to dive back into the safe haven JPY in the coming months. All in all, economists at Rabobank forecast the USD/JPY pair at 106 on a three-month horizon.

Key quotes

“In view of the JPY’s role as a safe-haven, the ebb and flow of regional political tensions is likely to have a greater impact on the currency than domestic politics. Given that a change in PM hasn’t rocked markets it is unlikely that the JPY will take much lead from this week’s BoJ policy meeting.”

“On the view that the changes in Japanese domestic politics are unlikely to become a prime focus for the JPY, we expect USD/JPY to hold close to the 106 area on a three-month view.”