USD/JPY: Quite the round trip! – ING

The Japanese Yen (JPY) was one of the prime beneficiaries of the ‘sell America’ theme that we briefly saw in April, ING's FX analysts Francesco Pesole and Chris Turner note.

USD/JPY to target 140

"The failure of US Treasuries to play the role of ‘safe asset’ was central here. Our rates strategy team does not rule out that happening again this summer should Washington push ahead with unfunded tax cuts. Recall that around $5tr is required to pay for an extension of the TCJA 2017 tax-cutting legislation."

"For the short term, heavy one-way positioning long yen could see the 150 level retested – but we doubt it stays there long."

"A 25bp rate hike from the Bank of Japan in the third quarter, when the Fed restarts its easing cycle, points to 140 for USD/JPY."