#USDJPY @ 131.830 : The ingredients are in place for a renewed move lower – HSBC
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A focus on Bank of Japan (BoJ) succession and prospective policy changes could see renewed JPY strength, according to economists at HSBC.
“A move lower in USD/JPY over the coming few weeks will mostly rely on the outlook for BoJ policy change, but other more medium-term forces (such as improving current account balance) should also be helping in the background.”
“BoJ Governor Kuroda’s term ends on 8 April but the process of identifying his successor is likely to become more prominent in February. This will keep the narrative of potential policy change front and center in the coming weeks even if that change may have to wait for a number of months.”
“With the JPY still undervalued (based on its real effective exchange rate) and residents underhedged, we think the ingredients are in place for a renewed move lower in USD/JPY.”
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