EUR/JPY to race higher following global growth – ING

EUR/JPY has corrected lower over recent months in line with the US 2-10-year Treasury curve – effectively pricing slower global growth. Nonetheless, economists at ING expect the pair to drift higher as global growth is still up.

The battle of the low yielders

“Our rates team feel that the US curve move is distorted by summer markets and that a return to some steepening should start in September. That could give EUR/JPY a lift.” 

“This year’s commodity boom has also thrown up some challenges for Asia. We normally assume Asia wants weaker currencies to support exporters, but with Japan and China on the wrong end of higher commodity prices, it seems that China might prefer a stable CNY. Could we see the same from Japan?” 

“Overall, we think EUR/JPY follows global growth – which is still up.”