USD/JPY may continue to decline gradually - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, maintain a neutral bias in the USD/JPY pair for the next week and expect it to trade between 98.50 and 101.50.

Key Quotes:

“USD/JPY has broken below 100 even without any downside factors vis-a-vis global risk sentiment. The USD/JPY fall has been driven by real JPY buying, most notably Japanese investors' repatriation of cash earnings.”

“The trade account surplus in July was a result of falling imports, rather than an export recovery. Recent weekly capital flow data clearly shows massive outflows of Japanese investor funds. Even so, however, those flows have not quelled the drop in USD/JPY. Looking ahead, Japanese investors may remain cautious for now. It's still mid-summer and the BoJ's September meeting, when it will make a comprehensive assessment of QQE combined with negative interest rates, lies ahead.”

“USD/JPY may continue to decline gradually, though the pace could slow if the Government verbally intervenes. But verbal intervention would not stop the fall.”