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Mar 06 - 12:55 PM

ANZ: Recommends Fading Recent JPY Gains, Anticipates USD/JPY Return to 151

By eFXdata  —  Mar 06 - 10:45 AM

Synopsis:

ANZ advises against the recent surge in the Japanese yen (JPY), sparked by remarks from the Bank of Japan's (BoJ) Deputy Governor Takata, suggesting the current market reaction may not herald a significant shift in Japan's monetary policy. The bank's assessment underlines the challenging backdrop for the yen and casts doubts on an imminent exit from negative interest rates by the BoJ. Consequently, ANZ suggests that the recent appreciation of the JPY may be temporary, anticipating a resurgence in USD/JPY rates beyond 150.

Key Points:

  • Despite Deputy Governor Takata's comments triggering a JPY rally, ANZ views the fundamental outlook for the yen as unchanged and unaccommodative for a major policy shift.
  • The critical BoJ meetings in March and April are highlighted as potential inflection points, but ANZ remains skeptical about a durable JPY strength ahead of these events.
  • Historical patterns indicate that the yen often relinquishes gains following BoJ-related optimism, pointing to the potential for a return to higher USD/JPY levels.

Conclusion:

ANZ positions itself against the recent gains of the Japanese yen, projecting another rally for USD/JPY into the 151 territory. Given the distant BoJ meetings and historical tendencies for post-BoJ-speak retracements in the JPY, ANZ advises market participants to consider the current yen strength as an opportunity to prepare for its depreciation. The bank's stance suggests skepticism towards a near-term departure from negative interest rates by the BoJ, thereby anticipating a reversal in the yen's fortunes.

Source:
ANZ Research/Market Commentary

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