Nordea Markets official forecast is unchanged: USDJPY at 102 in 3M, with downside risks.
“Our baseline remains that the Bank of Japan will not engage in more quantitative easing, in contrast to the common hope among market participants now. For example, close to 50% of the surveyed economists (8 May) still expect the BoJ to engage in more easing by July,” Nordea projects.
“All else equal, failing Abenomics should suggest a weaker stock market and a lower USDJPY currency cross. It must get worse before it gets better! That is, we first need to see a trigger for the BoJ to act – and that trigger will likely be associated with the worsening risk sentiment and a stronger JPY,” Nordea argues.
“In the very short term, the USDJPY faces support around 101.5, which has held several times. If it fails – we will see a double digit USDJPY in no time,” Nordea adds.