USD/JPY on track to climb towards 125 by year-end – Scotiabank

FXStreet (Barcelona) - The recent data out of Japan suggests that the BoJ might be pressurized to ease further, notes Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, while predicting USD/JPY to eventually move higher towards 125 levels by 2015-end.

Key Quotes

“The Tankan quarterly survey was weaker than expected, with the headline index flat to Q4 at 12 and the outlook at 10; with large manufacturers using an average USDJPY rate of 111.81 in fiscal 2015 (this is a relatively conservative forecast).”

“Also released today was a drop in Japan’s Markit manufacturing PMI to 50.3, its lowest level in 10‐months with the details highlighting a soft domestic demand environment.”

“The data from Japan has largely been disappointing, which will put additional pressure on the BoJ.”

“Today’s statement and press conference (11pm EST) is expected to announce a carrying over of policy, but the market will watch closely for a change in tone.”

“We expect USDJPY to eventually climb higher and hold a year‐end 125 target.”