Despite the USD/JPY's significant gain over the last two days, "we believe dollar/yen will eventually fall back to below 80 again," JPMorgan Chase Bank head of Japan rates & FX research Tohru Sasaki says in a note. JPY weakened recently amid expectations for aggressive easing by the BOJ under a new Japanese government. With a general election looming, LDP chief Abe has called for such BOJ steps. "However, it's still uncertain whether Abe will actually be able to implement all he has commented on, especially under the current BOJ law," Sasaki says. He adds various data also indicate there's no significant change in JPY flows except perhaps potential FDI flows; "while further weakness of JPY in coming days cannot be ruled out, we find no significant change is happening in JPY flows and yield differentials between the U.S. and Japan." The USD/JPY is last at 81.14.
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