Analysts at Mitsubishi UFJ Financial Group Inc.’s (MUFG) are not expecting the yen weakness we’ve been seeing to carry on:

• Yen … looks over-extended to the downside

Their forecasts for USD/JPY out for the next 12 months:

• Q3 2023 136.00
• Q4 2023 134.00
• Q1 2024 132.00
• Q2 2024 130.00

MUFG outline 4 reasons for the BOJ to pivot, saying

1. Japan’s equity market outperformance
2. positive inflation in land and property prices
3. high and sustained household inflation expectations
4. underlying inflation at a level not seen since 1981

And this leaves:

• every BoJ meeting as live for a surprise policy change

MUFG conclude on the yen outlook:

• we see a BoJ shift in YCC and a Fed pause by September helping fuel a sustained turnaround

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BOJ dates ahead for the rest of this year:

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