Scotia comment on the yen, looking for it to continue to show strength, due to:
- favourable real yield differentials
- diverging growth outlook in the US compared to the rest of world,
- positive technicals
- seasonality (say August has been the second-best month for the Japanese currency since 1994)
"We think the charts point to a USD decline to 104 at least and suggest potential for the decline to reach 102 in the next 1-2 months"
"This would approximate to the low point of the "dollar smile" framework (where the USD under-performs amid improving prospects ex-USA, risk assets are supported, and liquidity tensions are absent"
