USD/JPY: Not following spreads, forecast at 112 in 12M - NBF

Analysts at the National Bank of Canada project the USD/JPY pair at 108 at the end of the second quarter, at 110 by the end of Q3 and 112 by Q1 2019. 

Key Quotes:

“Having gained more than 5% in Q1, the Japanese yen is on track to register a third consecutive year of gains against the USD. Economic reports released during the first quarter confirmed real GDP expanded 1.6% last year, double the Bank of Japan’s estimate for potential growth and the best performance in four years. Japan’s real exports also soared to an all-time high.”

“The more recent leg of yen appreciation came courtesy of global risk aversion. Should financial markets regain their composure amidst an improving global economy, and GDP growth fall towards potential, the yen is likely to give back some of its recent gains and hence better reflect Japan-U.S. interest rate spreads.”