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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 38 institutional desks. No promotion.
Japan's consumer inflation rate edged up to 2.1% in September, prompting speculation that the Bank of Japan may tighten monetary policy at its upcoming December meeting. This shift could indicate a pivot from the longstanding ultra-loose stance aimed at achieving sustainable price growth. Given the increasing inflationary pressures, market participants are now reassessing their outlooks for the JPY and potential rate adjustments, emphasizing the urgency of this development in the context of broader global monetary policy dynamics.
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). [PUBLISHER']s view aligns more closely with the upper third — JPMorgan and ING share that framing.
JPMorgan's target aligns with the inflation narrative, pushing for a stronger JPY with a target of 1.10 by March 26. Conversely, BofA takes a cautious stance, forecasting a lower level at 1.04, suggesting that they do not fully endorse the inflation-driven outlook on BOJ policy. Their latest perspectives reflect differing interpretations of Japan's inflation trajectory as detailed in our internal reports.
Recent analysis across the board echoes sentiments of a potential shift in BOJ policy. As inflation figures begin to surpass previous benchmarks, we may see upward adjustments in forecasts moving forward, particularly in response to consumer price trends and BOJ communications. For further context, see /research/... .
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
Market implications
Traders should monitor the December BOJ meeting, key for potential policy changes. Watch for JPY positioning around this date, especially the consensus target of 1.075 for EUR/USD as a benchmark.
Risks to this view
Should inflation metrics retract or global economic conditions shift, the BOJ may refrain from rate hikes, reversing the current market sentiment. Upcoming data releases could catalyze such adjustments, necessitating close attention.
Sentiment by currency
USD EUR~JPY+GBP~Composite USD score: -0.65
How we cover this story