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JPY: Rabobank Still Believe USDJPY Can Move Back to 145.00 This Year

JPY
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  • Rabobank believe there are two key factors for USDJPY making a convincing break below 155.00. Firstly, the signals provided about the pace of tariffs announced by Trump will remain a key influence on the USD, and the Fed’s scope to continue easing.
  • A second key factor for the USDJPY outlook according to Rabo will be the relative hawkishness of BoJ Governor Ueda on Friday. They believe his tone will impact expectations regarding the timing of the next policy move. Rabo reiterate their view that USDJPY can move back to 145 on a 12-month view, though this assumes a cautious, but progressive trajectory for BoJ interest rate hikes.
  • The bank also notes that while Trump has not singled out Japan with respect to his tariffs threats this week, it is assumed that they are coming. It is commonly considered likely that Japan’s auto sector will be in Trump’s line of fire. Vehicles (including parts and accessories) comprise almost 30% of Japan’s exports to the US, which is bigger than any other sector.
  • Rabo caveat this by noting that during Trump’s first presidency a trade deal that gave US farmers more access to the Japanese market allowed the auto sector to avoid extra tariffs.
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  • Rabobank believe there are two key factors for USDJPY making a convincing break below 155.00. Firstly, the signals provided about the pace of tariffs announced by Trump will remain a key influence on the USD, and the Fed’s scope to continue easing.
  • A second key factor for the USDJPY outlook according to Rabo will be the relative hawkishness of BoJ Governor Ueda on Friday. They believe his tone will impact expectations regarding the timing of the next policy move. Rabo reiterate their view that USDJPY can move back to 145 on a 12-month view, though this assumes a cautious, but progressive trajectory for BoJ interest rate hikes.
  • The bank also notes that while Trump has not singled out Japan with respect to his tariffs threats this week, it is assumed that they are coming. It is commonly considered likely that Japan’s auto sector will be in Trump’s line of fire. Vehicles (including parts and accessories) comprise almost 30% of Japan’s exports to the US, which is bigger than any other sector.
  • Rabo caveat this by noting that during Trump’s first presidency a trade deal that gave US farmers more access to the Japanese market allowed the auto sector to avoid extra tariffs.