The return of financial crisis conditions has seen the Japanese Yen return as the clear outperformer. Economists at ING expect the USD/JPY pair to dip below 130.

The Yen will be winning from the macro side

“The Yen has normally played the role of safe haven currency during times like these because of Japan's large current account and net foreign asset position (years of surpluses).”

“The US banking crisis stands to tighten US credit conditions, hit US growth, and accelerate the timing of the Fed easing cycle. The same is true for other major central banks and, in effect, will drag global interest rates closer to the rock bottom rates in Japan.”

“USD/JPY could easily trade under 130 should banking sector conditions deteriorate again and recent events on both sides of the Atlantic only give us greater confidence in our year-end USD/JPY forecast of 120.”