May 10 2024: Bank of America Securities suggests that the Japanese yen may experience further weakening based on its recent foreign exchange and rates sentiment survey.
As of 10:25 ET (14:25 GMT), USD/JPY was up 0.2% at ¥155.83, marking a nearly 2% increase for the week and signaling renewed yen weakness.
In the previous week, Japanese authorities reportedly spent around $60 billion to prevent the yen from hitting a 34-year low of ¥160.24 against the dollar.
BOA Securities’ survey has consistently shown a bullish yen bias since mid-2022, but recent trends indicate a shift. With USD/JPY reaching new highs in April, investors have taken the largest JPY short position since 2022, reflecting doubts about Japan’s FX intervention effectiveness.
Most fund managers surveyed anticipate USD/JPY to retest ¥160, with no one expecting a reversal to ¥150.
“While we generally agree with these views, the sudden change regarding JPY warrants caution for short positions in the near term,” the bank noted.
