According to the currency strategists of the largest bank, Barclays Securities Japan, in the near future the Japanese currency may demonstrate growth. Demand for it as a defensive asset will increase, analysts are certain.
According to Barclays Securities Japan, the USD/JPY pair is on the verge of a new price range from 100 to 105, in which it will remain until the end of the year. The pair's dynamics will depend on the results of the US-China trade war, analysts emphasize. They are confident that investors will actively acquire the Japanese currency as a safe haven asset. At the moment, USD/JPY is under downward pressure due to the inaction of Japanese exporters who expect any price rebound to start selling. At the same time, other investors may restrain purchases of foreign bonds, since they do not exclude the acceleration of the yen rally.
Analysts recommend closely monitoring the dynamics of defensive assets, the demand for which has grown significantly. On Monday, August 26, the USD/JPY pair made an attempt to gain a foothold above 106.50, but lost more than 200 points. As a result, the Japanese currency fell below 105.00, updating the low since November 2016. However, specialists are positive, despite the fact that sales of the yen still remain relevant. At the moment, USD/JPY is trading in the range from 105.82 to 105.90, trying to regain previous positions.
According to Barclays analysts, the upward trend of the yen may slow down due to fears of a possible depreciation of the Japanese currency. Analysts believe that Japanese authorities can allow this after the USD/JPY pair drops below the level of 105. At the moment, the market is closely monitoring the actions of the Bank of Japan, expecting whether the regulator will take additional incentive measures at the upcoming September meeting.
The Japanese government is unlikely to intervene in the situation, since the current level of the US dollar against the yen is not critical. It is possible that Japanese authorities will remain on the sidelines also because they do not want a conflict with the United States. The leadership of Japan does not want to receive the status of a currency manipulator, analysts emphasize.
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