UBS raises USD/JPY forecasts on oil prices and BoJ caution - Investing.com Australia
UBS upgrades USD/JPY forecasts, citing elevated oil prices and Bank of Japan caution, contrasting with consensus expectations for yen appreciation.
What the desk is arguing
UBS has raised its USD/JPY forecasts, arguing that higher oil prices will keep US inflation elevated and delay Fed easing, while the Bank of Japan remains hesitant to normalize policy aggressively. This combination supports a stronger dollar versus the yen.
The desk sees limited scope for yen appreciation near term, as Japan's energy import costs rise with oil and the BoJ maintains a cautious stance. UBS implicitly rejects the consensus view that the yen will strengthen to 147-150 by end-2026.
Where it sits in our coverage
Our internal consensus for USD/JPY stands at 147.50 for December 2026, with a firm-level spread from 140 to 164—a significant 24-figure range. UBS's bullish dollar view diverges from the median, which expects yen gains.
Specific firm targets for Dec26 highlight the divergence: - **JPMorgan**: 164 - **Goldman Sachs**: 148 - **Morgan Stanley**: 140 - **Barclays**: 149
JPMorgan aligns with UBS's dollar-bullish stance, while Morgan Stanley is the most bearish on USD/JPY.
How other firms see it
Among the banks in our coverage, **JPMorgan** stands out as aligned with UBS, forecasting USD/JPY at 164 for December 2026—well above consensus. This is the most extreme dollar-bullish call.
In contrast, the majority of firms see yen strength: - **Morgan Stanley**: 140 - **Deutsche Bank**: 143 - **MUFG**: 146 - **BofA**: 147 - **Goldman Sachs**: 148 - **Barclays**: 149 - **ING**: 152
Notably, Goldman Sachs and Barclays are close to consensus, while Morgan Stanley and Deutsche Bank are the most contrary, targeting significant yen appreciation.
How firms align with this view
Aligned with the desk view
Key takeaways
- 01UBS raises USD/JPY forecasts on oil prices and BoJ caution.
- 02Consensus targets 147.50 for Dec26, but UBS likely expects a higher path.
- 03JPMorgan aligns with UBS at 164; Morgan Stanley is most contrary at 140.
Market implications
The UBS revision adds to the bull case for USD/JPY, potentially supporting spot levels near 157. If other banks follow, yen depreciation could accelerate, challenging the consensus view of a gradual yen recovery.
Risks to this view
Key risks include a sharp drop in oil prices, a more hawkish BoJ shift, or Fed easing that reverses dollar gains. The wide dispersion in forecasts (140-164) underscores uncertainty around BoJ policy and global inflation.
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.