JPY: Becoming a ‘real’ laggard – ANZ

Research Team at ANZ, suggests that after a long period of outperformance, they now think USD/JPY is biased higher and so have lifted their 2017 forecast to 115.

Key Quotes

“The trajectory of real rate differentials and of the current account – two key drivers of recent strength – are also set to turn, adding weight to our view that the risks for USD/JPY are now skewed higher.”

“Japanese investor outflows will also play a role. For now, global liquidity should remain sufficiently easy, and as such volatility should remain contained, thereby supporting flow. However, the degree and impact of the global steepener will be a critical risk to keep an eye on.”