USDJPY to stay supported - ING

Research Team at ING notes that the consensus expects $/JPY to stay supported and end this year at around 116/117.

Key Quotes

“US yields are expected to stay firm and we see the 10-year Treasury at 2.75% in the early part of the year, some correction mid-year when Congress reins in Trump’s plans, and then a further rise in yields into year-end when a serious debate is had about the size of the Fed’s balance sheet.”

“With the BoJ still heavily buying JGBs at a time when the Fed is tightening, USD/JPY should be biased towards 120. At some point, however, Japan’s super-loose policy may come into question given signs that domestic activity is picking up.”

“Main downside risk to USD/JPY comes from the White House, however. Protectionism and Japan appearing to be in Trump’s sights warn of the occasional bouts of safe haven JPY strength.”