Despite the JPY’s rebound against the USD since mid-July, analysts at Scotiabank see little reason for optimism on the near-term outlook. They forecast the USD/JPY at 140 by the end of the year.

USD/JPY gains towards the 140 area in H2 may represent a high-water mark

“Wide US-Japan yield differentials will keep the JPY soft for the foreseeable future while high commodity prices represent another, negative impulse on the currency (via a negative terms of trade shock).”

“We expect USD/JPY to remain around the 140 level through year-end.”