Bank of America: Japanese Yen Weakness Expected to Continue

Bank of America Survey Insights

More Japanese yen weakness looks likely, according to Bank of America Securities, citing its latest foreign exchange and rates sentiment survey.

Current Market Situation

Currently, at 10:25 ET (14:25 GMT), the yen is trading 0.2% higher at ¥155.83, with the pair having gained just under 2% this week as yen weakness returned.

Japanese Intervention

Japanese authorities are seen having spent almost $60 billion the previous week pulling the yen away from a 34-year-low of ¥160.24 versus the dollar.

Shift in Sentiment

The bank’s survey has shown a consistently bullish yen bias since mid-2022, analysts at BOA Securities said, until now.

Investor Sentiment

With USDJPY breaching new highs in April, investors have flipped to the largest JPY short since 2022, and there is deep skepticism around the effectiveness of Japan’s FX intervention.

Market Expectations

The majority of fund managers polled expect USDJPY to retest ¥160, with no one expecting a reversal to ¥150.

Caution Advised

“While we generally share these views, the volte-face on JPY perhaps warrants near-term caution for shorts,” the bank added.

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