Societe Generale forecasts USD/JPY under 140 in Q2 of 2024

Key Insights:

1. BoJ Meeting Outcomes:

The BoJ maintained its current policies but indicated positive prospects for wages and inflation, along with concerns about the side-effects of negative rates and yield curve control, suggesting possible policy changes by mid-2024.

2. Market Reactions:

The market remains skeptical about BOJ policy change, but the yen is supported by a calmer U.S. bond market and China’s potential equity market support plan, financed through repatriation of foreign currency holdings.

3. Yuan and Other Currencies:

The Chinese yuan, Australian dollar, and South Korean won have risen slightly more than the yen in response to these developments.

4. USD/JPY Projections:

Based on yield forecasts, SocGen contends that USD/JPY should currently be closer to 140 than 150 and is likely to fall below 140 in the second quarter of 2024, ending the year around 135.

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