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Forex pairs in this Article » USD/JPY (Bali) - In 2014, in view of Tohru Sasaki and Junya Tanase, FX Strategists at JP Morgan,the Yen being the optimal funding currency should strengthen further as the Fed and BoJ polices diverge.

Key Quotes

"Our forecasts for US-Japan nominal and real yield differentials suggest USD/JPY will rise to 106-109 in the second half of next year."

" JPY weakness in 2014 is unlikely to be a steady one. Our USD/JPY targets are 104 for 1Q14, 100 for 2Q14, 102 for 3Q14 and 106 for 4Q14."

"Risks: On the positive side, 1) a spike in market volatility due to a sharp slowdown in global economy, 2) monetary policy goes in the opposite direction to our expectation, 3) Japanese economy sharply slows down after an expected consumption tax rate hike."

"Risks: On the negative side, 4) domestic investors (retails in particular) increase investments in foreignassets significantly, 5) acceleration in Japan’s inflation."
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