USD/JPY trend will be lower - Nomura

Analysts at Nomura continue to believe that the trend in USD/JPY will be lower as the cross remains highly sensitive to the BOJ exit and carry is not yet large enough to be positive for USD/JPY.

Key Quotes

“Trade and geopolitical tensions is keeping risk appetite fragile. Japan’s large current account surplus is also likely to support the yen. Finally, Japanese investors appear to be shifting their bond purchases to Europe and EM and away from the US. Similarly, on the less volatile FDI side, we also find that Japan FDI flows to the US peaked in 2016 and have since been more focused on non-US markets. Taking all these factors together we expect a medium-term move in USD/JPY to its fair value of 90 and a potential move to 100 in the coming months.”