CIBC Research discusses USD/JPY outlook and targets the pair at 102 in Q1 and at 100 by year-end.
"We remain wary of extrapolating the trend, as Japanese investors are likely to continue to look towards other liquid fixed income markets in the same time zone. Indeed, Japanese appetite for Australian bonds is part of the reason for ongoing AUD momentum. The latest quarterly Tankan business survey, while taken before the full impact of the second wave, showed a modest improvement in sentiment, for the second consecutive quarter," CIBC notes.
"Against a still structurally compromised USD, we expect cautious JPY gains. Expect the MoF to push back should the JPY advance too quickly. The Tankan survey revealed that large manufacturers forecast a budget rate of 106.70 for fiscal year 2020. As a consequence, it seems likely that exporter profits are likely to be compromised by the prospect of modest JPY gains," CIBC adds.