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13 Mar 2015
USD/JPY expected to maintain 125 through 2015-end - BTMU
FXStreet (Barcelona) - Takahiro Sekido, Japan Strategist at BTMU, comments that with Japan’s domestic mechanism well-functioned, any depreciation in JPY would be limited, further expecting USD/JPY to maintain the topside of the range at 125 through year-end.
Key Quotes
“March economic indicators reflect strong momentum for Abenomics. January labor cash earnings rose +1.3% YoY, beating market expectations (+0.5% YoY), lifted by +10.8% YoY bonus growth.”
“The double-digit bonus growth in the January data was a big surprise. This indicates a positive distribution mechanism among large and medium-sized companies.”
“Looking ahead, wage growth following the spring labor negotiations may be even better than in 2014”
“In addition, though 4Q 2014 GDP data was downgraded to +1.5% QoQ annualized from +2.2% QoQ annualized, private consumption (+0.3% QoQ in 1Q to +0.5% QoQ in 2Q) and public demand (+0.1% QoQ in 1Q to +0.3% QoQ in 2Q) were upgraded.”
“Japan’s growth momentum will clearly pick up as domestic demand recovers.”
“Against a positive distribution mechanism between the corporate and household sectors, the BoJ can wait for oil prices to recover without adding any further monetary easing given the positive wage growth as well as export-driven production growth.”
“However, we expect the CPI to turn negative in the coming months.”
“Any further JPY depreciation will likely be moderate. We maintain the topside of our USDJPY range USD125 through end-2015.”
Key Quotes
“March economic indicators reflect strong momentum for Abenomics. January labor cash earnings rose +1.3% YoY, beating market expectations (+0.5% YoY), lifted by +10.8% YoY bonus growth.”
“The double-digit bonus growth in the January data was a big surprise. This indicates a positive distribution mechanism among large and medium-sized companies.”
“Looking ahead, wage growth following the spring labor negotiations may be even better than in 2014”
“In addition, though 4Q 2014 GDP data was downgraded to +1.5% QoQ annualized from +2.2% QoQ annualized, private consumption (+0.3% QoQ in 1Q to +0.5% QoQ in 2Q) and public demand (+0.1% QoQ in 1Q to +0.3% QoQ in 2Q) were upgraded.”
“Japan’s growth momentum will clearly pick up as domestic demand recovers.”
“Against a positive distribution mechanism between the corporate and household sectors, the BoJ can wait for oil prices to recover without adding any further monetary easing given the positive wage growth as well as export-driven production growth.”
“However, we expect the CPI to turn negative in the coming months.”
“Any further JPY depreciation will likely be moderate. We maintain the topside of our USDJPY range USD125 through end-2015.”