JPY: further weakness stays on the cards – Danske Bank

Christin Tuxen, Chief Analyst at Danske Bank, sees the Japanese safe haven under extra downside pressure in the next weeks.

Key Quotes

“The yen continues to take a beating with notably EUR/JPY testing New Year highs. Looking through the wave of 'normalisation' talk from central banks (including the Fed, BoC, ECB, BoE) recently, it is noteworthy how the BoJ has been remarkably silent”.

“Indeed, Kuroda and co have made no attempts to re-invoke exit discussions this week, which it had to raise at the last meeting. The BoJ thus appears sidelined while a range of others have joined the urge for normalisation endorsed by notably the recent BIS annual report”.

“This divergence suggests JPY weakness could be here to stay for a while and we note that Japanese inflation expectations continue to edge lower, contrasting with the picture in the US and the eurozone in recent days”.