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FXJapan
JPY: Finely balanced
Frankly, we’re a bit disappointed that the JPY did not fall further on the crosses in 2017. True we saw a nice 7-10% rally in the Europe/JPY crosses but we were expecting a little more
Executive summary
- The window for much further upside in USD/JPY should slowly close in 2018. The best chance for a rally will probably be in 1Q18 when US Treasury yields rise.
- BoP position looks finely balanced, where Japan’s growing current account surplus is being re-cycled offshore via FDI outflows. Portfolio flows will be key.
- Taking a view on real yield spreads will be key for the USD/JPY trajectory. We suspect at JPY real yields rise later in the year, as inflation expectations fall.
This report is part of our 2018 FX outlook published December 2017
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This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more