Economists at ING highlight no signs of concern from Japan regarding JPY weakness. As such, they expect USD/JPY to race higher given that no action is set to take place until the pair reaches the 120 level.

No concern from Tokyo

“Clearly there is no panic in Tokyo over USD/JPY back near 116. And we suspect that it would take a fast move to 120 to trigger a little more concern.”

“We know that the JPY has the highest negative correlation with global equity markets. But were some stability to emerge in equities, and US 10-year yields to drive up to the 2.00/2.25% area as we suspect, USD/JPY could start to motor on the upside.”

“As for other currencies, expect the JPY to be interested in the big energy meetings this week, including OPEC+. Brent pushing towards $90/bl – and coal prices rising too – are negative for Japan’s terms of trade and the JPY.”