Analysts at Barclays say the yen is likely to remain under downward pressure in the coming quarters, outlining 3 reasons:
- First the Bank of Japan (BoJ) lags monetary policy normalisation amid relatively contained domestic inflation despite global stickingflation driving hiking cycles elsewhere, resulting in widening yield differentials
- Second, as COVID-induced safe-haven dominance of the USD fades in favour of JPY's safe-haven revival, the yen should face headwinds so long as a positive global risk backdrop remains.
- Third the yen's negative FX supply-demand continues to weigh on the currency with the ongoing capital outflows via external portfolio and direct investment and negative terms-of-trade impact of heightened oil prices
For bank trade ideas, check out eFX Plus.