Societe Generale Research sees a scope for further JPY weakness in the near-term.
"On the other side of the equation, USD/JPY is back to pre-plaza (1985) levels in real terms. How cheap can it get? What concerns me on that score, is the increased importance to Japan’s economy of China, relative to the US. 20 years ago, China exported 4 times as much to the US as China, but now, exports to China are higher than ones to the US. But Japan still runs a trade deficit with China as imports have increased even more sharply," SocGen notes.
"So, the yen’s cheap but unless/until that revives exports dramatically, does it matter? In the meantime, a weak Chinese economy, rising bond yields, rising oil prices and the lack of market drama encourage more and more people to join the short yen trade," SocGen adds.