By eFXdata — Feb 03 - 10:30 AM
Synopsis:
Goldman Sachs reiterates that USD/JPY is primarily driven by US economic conditions, not BoJ policy. Despite the BoJ's rate hike and hawkish inflation message, the yen barely moved, highlighting how US growth expectations dictate USD/JPY direction.
Key Points:
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US Outlook Dominates USD/JPY:
- BoJ’s hawkish shift failed to lift JPY, while US macro concerns triggered brief yen strength.
- USD/JPY typically falls when US recession fears rise, pressing equities and yields lower together.
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2025 USD/JPY Forecast—Targeting 162:
- US inflation risks remain, while Europe struggles with weaker growth.
- Preference for long CHF over JPY in risk-off environments.
- Baseline expectation: US outperformance → Higher yields & stronger USD.
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Key Risk to This View:
- A US economic slowdown or a sustained risk-off move could halt USD/JPY gains.
Conclusion:
Goldman sees USD/JPY rising to 162 over the next 12 months, driven by US growth exceptionalism, rather than BoJ policy shifts. The main risk to this view is a prolonged US economic slowdown
Source:
Goldman Sachs Research/Market Commentary