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25 May 2015
USD/JPY year-end target at 125 – DB
FXStreet (Barcelona) - Taisuke Tanaka, Strategist at Deutsche Bank, recommends building a USD/JPY long position, expecting a move higher towards 125 by 2015-end.
Key Quotes
“We believe broader-based strength in US indicators will be necessary to propel the USD/JPY significantly beyond its current range. We believe the US will revise down its 1Q 2015 GDP estimate from a preliminary +0.2% QoQ (annualized) to -0.9%, but monthly data in 2Q is improving.”
“We should also keep an eye on the momentum of dollar-buying by Japanese pension funds, which slowed in the first half of this month. We expect the peak to come in 1H FY3/16, but the timing and extent of this will determine the speed and breadth of the expected rally in the USD/JPY and resistance to any correction.”
“In any case, we believe the USD/JPY will eventually reach ¥125 at year-end. We recommend building a USD/JPY long position by buying on weakness, taking partial profit at benchmarks such as ¥120 or the previous high (¥122.03 on 10 March, Bloomberg) and using the remainder to aim for a further rise.”
Key Quotes
“We believe broader-based strength in US indicators will be necessary to propel the USD/JPY significantly beyond its current range. We believe the US will revise down its 1Q 2015 GDP estimate from a preliminary +0.2% QoQ (annualized) to -0.9%, but monthly data in 2Q is improving.”
“We should also keep an eye on the momentum of dollar-buying by Japanese pension funds, which slowed in the first half of this month. We expect the peak to come in 1H FY3/16, but the timing and extent of this will determine the speed and breadth of the expected rally in the USD/JPY and resistance to any correction.”
“In any case, we believe the USD/JPY will eventually reach ¥125 at year-end. We recommend building a USD/JPY long position by buying on weakness, taking partial profit at benchmarks such as ¥120 or the previous high (¥122.03 on 10 March, Bloomberg) and using the remainder to aim for a further rise.”