UBS raises USD/JPY forecast on elevated energy prices/ - Investing.com Nigeria
UBS's upward revision of its USD/JPY forecast reflects a growing concern about elevated energy prices influencing Japanese monetary policy and the yen's valuation. This adjustment comes amid calls for tighter monetary policy from the Bank of Japan as inflation remains stubbornly high, particularly in energy sectors.
What the desk is arguing
The USD/JPY forecast increase by UBS signals a broader trend where higher energy costs could lead to a more hawkish stance from the Bank of Japan. The rising prices exacerbate inflationary pressures in Japan, prompting speculation that the Bank might shift its ultra-loose policy sooner than previously expected.
Additionally, with the current spot at 157.0000, the market appears to be pricing in a sustained period of elevated energy costs, which is likely to put further downward pressure on the yen. UBS's move aligns with other market participants who are factoring in these risks, although the consensus remains conservative going into 2026.
Where it sits in our coverage
Our consensus target for USD/JPY is currently at 147.5000 for December 2026, reflecting a divergence from UBS's revised outlook. Firms are projecting a broad range, with individual estimates from 150.0000 to 164.0000, highlighting the uncertainty and differing views surrounding the currency pair's direction.
Specifically, the following firms have published their December 2026 targets:
- **JPMorgan**: 164.0000 - **Goldman**: 148.0000 - **Morgan Stanley**: 140.0000
How other firms see it
Several other firms are taking a more tempered view on USD/JPY, reflecting cautious optimism amid the energy price shock. **Goldman** and **Morgan Stanley** maintain relatively conservative targets, suggesting that while UBS's outlook could gain traction, it is not universally accepted.
- **Goldman**: 148.0000 - **Morgan Stanley**: 140.0000 - **MUFG**: 146.0000
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01UBS's raised USD/JPY forecast reflects concerns about high energy prices.
- 02Market speculation is growing regarding the Bank of Japan's potential policy shift.
- 03Current consensus targets for USD/JPY remain conservative despite UBS's bullish stance.
Market implications
The revision by UBS may encourage other banks to reassess their positions on USD/JPY, particularly if energy prices remain elevated. A hawkish shift from the Bank of Japan could support a stronger dollar relative to the yen, especially if inflation persists.
Risks to this view
Key risks include unforeseen shifts in global energy prices and economic data coming from Japan that could alter the Bank of Japan's policy trajectory. If energy costs decrease, UBS’s forecast may be revised back down, affecting traders who are positioned for yen weakness.
Sources & References
How we cover this story
Cross-firm research
USD/JPY at 156.80: Consensus Targets 147.5 but JPM Holds 164
USD/JPY trades 6.3% above the eight-firm median target of 147.5, with a 24-point dispersion range exposing deep disagreement on BoJ policy timing and US yield durability.
USD/JPY at 156.90: Consensus Targets 147.5, Spread Runs 24 Figures
USD/JPY trades 6.4% above the eight-firm median Dec-26 target of 147.5, with a 24-figure dispersion exposing deep disagreement on BoJ pace and US yield trajectory.
USD/JPY at 157.23: Consensus Sees 147.5, Spread Runs 24 Figures
USD/JPY trades 6.6% above the eight-firm median Dec-26 target of 147.5, with a 24-figure dispersion that maps directly onto competing BoJ rate-path assumptions.