USD/JPY has set a 34-month high at 113.80. Economists at ING expect the pair to reach the 120.00 level as US yields lift off.

See: USD/JPY set to race higher towards 2017 highs at 118.62 – Credit Suisse

A new type of capitalism to hit the JPY?

“Pressure is building for a topside break out in USD/JPY. We think the US macro/Fed story will be a positive one for the dollar over the next 15 months (USD/JPY to trade to 120), while home-grown developments look slightly JPY bearish.”

“New PM Kishida is floating the idea of a ‘new type of capitalism’, where a capital gains tax could help in income redistribution. Japanese equities are worried.”

“With Japan still in deflation, the BoJ will be the last CB to hike.” 

“USD/JPY still shows by far the highest daily correlation with 10-year US yields. Expect upside pressure on both into year-end.”