Bank of America Global Research maintains a structural constructive bias on the JPY through year-end, targeting USD/JPY at 102 in Q3.
"The most notable data point from balance of payments is the record US equity purchase by Japanese investors in March (¥1.4tn), followed by ¥0.7tn purchase (the second biggest on record) in April, totaling roughly $20bn. Trust accounts led the flow, followed by insurance accounts and investment trusts...Japan's outward equity investment remained strong in May, but the flow was now led by "other" segment of investor type, which includes individuals and nonfinancial corporations, followed by investment trusts," BofA notes.
"This suggests an equity melt-up would be bearish for JPY as retail investors may chase the market, but a reversal should generate JPY gains. Risk sentiment will be key for JPY...We expect JPY to rise once the equity rally loses momentum," BofA adds.