Forex Flash: Sell into any Yen strength; USD/JPY likely to target 100 - Societe Generale

FXstreet.com (Barcelona) - The Yen is making fresh cycle lows vs the US Dollar and the Euro on late NY session. According to Kit Juckes, Head of FX at Societe Generale, "this week's Bank of Japan meeting was greeted with disappointment by a foreign exchange market which had simply travelled too far on hope and anticipation, but the BoJ's commitment to open-ended QE, even if it starts in 2014 and is still overly focused on the front end of the curve, is significant in the long run."

Kit expands: "I have struggled to see the point in raising the BOJ's inflation target from 1% to 2%, when it can't get near the 1% target anyway, but committing to buy bonds until inflation is at 2% means the BoJ will be buying bonds for a long time. On our economic forecasts, the Fed's balance sheet won't be growing in 2014 and that contrast will be very positive for USDJPY."

The FX specialist forebodes that a move to 100 "still seems very likely in the longer run." The next development is the appointment of a new BoJ Governor and how that plays out, he says. For the time being, "selling into any yen strength, or just sell the yen and live with the bumps" it the trade recommendation Kit provides to Societe Generale's clients.