Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore

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    From a Goldman Sachs note on the JPY Friday last week.

    Goldman Sachs forecast USD/JPY to 155 if the BOJ maintains its dovish stance

    In brief the analysts expect USD/JPY to 150 if the BOJ maintains its ultra-easy monetary policy. If the Bank backs away from this though that’s a risk to the forecast.

    Goldman Sachs forecast 155 in 6 months for USD/JPY Revised from 135

    “As long as the BOJ remains far from hiking rates and equities stay reasonably well supported, the yen should continue to trend weaker”

    GS also citing improving US growth outlook also a factor

    GS do note though:

    “The main risk to this forecast of more yen weakness over the next six months is that higher inflation and currency depreciation proves more unpopular and catalyses more forceful responses in the form of currency intervention or an earlier hawkish shift from the BOJ, or both”


    Bank of Japan monetary policy board member Naoki Tamura says its appropriate to keep easy monetary policy at present

    Personally feel sustained, stable achievement of 2% inflation target is clearly in sight
    Appropriate to keep easy policy now given uncertainty over prospects for hitting price goal
    We are in a phase where we need to humbly look at wage, price developments
    Hoping we will have further clarity around January-March next year on prospects for hitting price goal
    Don’t expect 10-year yield to rise to 1.0%, new cap is set as protective measure
    Uncertainty over Japan’s economic, price outlook very high
    BOJ’s step in July aimed at making operation of YCC more flexible
    Corporate price-setting behaviour has changed from period of deflation
    Positive cycle between wages, inflation being seen as wage rises improve consumer sentiment
    Japan’s exports, output moving sideways, capex rising moderately
    Japan’s economy likely to keep recovering driven by domestic demand
    Japan’s inflation likely to slow for time being, then accelerate moderately again
    Can’t rule out chance inflation may overshoot expectations
    I believe we can expect high wage growth in next year’s spring wage negotiations


    Mexico central bank Raise growth & inflation forecasts

    Sees 2023 GDP at 3.0% v 2.3% prior
    Sees 2024 GDP at 2.1% v 1.6% prior
    Sees Q4 core inflation at 5.1% v 5.0% prior

    Re-shoring production to North America a tailwind for Mexico & Mexican peso


    The Australian Dollar was the best performer of the week, buoyed by improving sentiment in commodities, iron ore hit a five-week high and oil prices Y
    [See the full post at: Forex Traders Weekly Outlook – The Aussie Bounces with Oil, Copper and Iron Ore]

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