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USD/JPY could reach 115.00 in 12m – Rabobank

FXStreet (Edinburgh) - In the view of Jane Foley, Senior Currency Strategist at Rabobank, the USD strength could lift the pair towards the 115.00 level in the next 12 months.

Key Quotes

“The softer than expected print for Japanese August CPI has heightened speculation regarding how policymakers may react to what appears to be Japan’s floundering economic recovery”.

“A spate of recent weak data releases have already highlighted the view that Japan’s economy is not bouncing back well in Q3 following the consumption tax induced contraction in Q2”.

“Although weak economic data have encouraged speculation that the BoJ will be forced to downgrade its forecasts for economic growth this year, no additional policy measures are expected by the market yet”.

“In view of the fact that the Fed’s QE programme is due to end next month, on a relative basis the size of the BoJ’s ongoing QE programme appears all the more remarkable. Talk that the BoJ could increase this programme further in the coming months should enhance the downward pressure on the yen”.

“The widening gap between the direction of Fed and BoJ monetary policies has been a driving force behind the recent push higher in USD/JPY”.

“On the back of the increased risk of further BoJ policy measures we have raised our 12 mth USD/JPY forecast to 115.00”.

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