MUFG wary of USD/JPY rising to 145, but rule out above 150

Comments on USD/JPY via MUFG:

• market is already leaning towards a weaker USD
• We therefore do not expect the USD/JPY to rise past 150
• However, the weakening of the Yen suggests that we cannot write off another sharp move higher like the rise to 145 at the end of June.
  

In the US, we expect the Fed’s interest rate hike cycle to end this year and a shift to rate cuts in 2024, while in Japan, the BoJ is moving to normalize policy and we expect it to consider further policy changes around the time that the results of next fiscal year’s spring labor negotiations are revealed.

• We thereore maintain our forecast for a weaker Dollar and a stronger Yen. However, looking at the Japanese side of the equation, the BoJ has not even nominally ended the YCC, and instead just changed the wording of the policy, making it difficult to expect a sharp strengthening of the Yen.

Range forecasts from the analysts at MUFG, for USD/JPY through to year-end

• Aug-Sep 135 – 146
• Oct-Dec 133 – 144