Forex Flash: USD/JPY set to range in 2013 – Goldman Sachs
FXstreet.com (Barcelona) - The Goldman Sachs Strategy team have taken a look at JPY's prospects in 2013 and believe that spot will range around 80 in USDJPY over 3,6 and 12 months and 100, 106.4 and 112 in EURJPY for the same periods respectively.
They note that PM elect Abe has been extremely vocal about the need for further easing which has been the key driver of Yen weakness since late September. With policy makers likely to take further action to control deflation, they are less likely to see new all time lows in USDJPY. However, they do not think that policy makers will do enough to cause the Yen to weaken materially against the dollar, particularly in the face of ongoing aggressive easing from the Fed and broad dollar weakness. They note that the US external balance is worse than Japan's, therefore, they have shifted from yen strength to stability.
They note that PM elect Abe has been extremely vocal about the need for further easing which has been the key driver of Yen weakness since late September. With policy makers likely to take further action to control deflation, they are less likely to see new all time lows in USDJPY. However, they do not think that policy makers will do enough to cause the Yen to weaken materially against the dollar, particularly in the face of ongoing aggressive easing from the Fed and broad dollar weakness. They note that the US external balance is worse than Japan's, therefore, they have shifted from yen strength to stability.
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