JPY: Lots of positives in the price – ING

The Japanese Yen (JPY) has continued to strengthen overnight, remaining the best performer in G10 since the start of the week, up 1.8% against the US Dollar (USD), ING's FX analyst Francesco Pesole notes.

A return to 148.0 remains achievable over the next few day

"The US-Japan trade deal is seemingly reinforcing market expectations on a Bank of Japan rate hike by the end of the year, which is now 20bp priced in, up from 16bp earlier this week and a 10bp low earlier in July."

"While our BoJ call has been generally more hawkish than pricing, it seems to us markets are underestimating the risks of a new prime minister potentially favouring a more cautious approach to rate hikes."

"The yen may have used up its short-term bullish ammunition with the post-election “sell the fact” effect and the US-Japan trade deal, and we expect a rebuilding of USD/JPY longs around current levels ahead of potential political turmoil and lingering debt concerns. A return to 148.0 remains achievable over the next few days."