John Higgins at Capital Economics said fundamentals still favor the yen and it should strengthen before end-2027. He described current yen weakness as puzzling: the US-Japan 5-year bond yield differential has moved in yen’s favor and the inflation-ad

2026-07-15

John Higgins at Capital Economics said fundamentals still favor the yen and it should strengthen before end-2027. He described current yen weakness as puzzling: the US-Japan 5-year bond yield differential has moved in yen’s favor and the inflation-adjusted real policy-rate gap that was materially positive has now disappeared. He noted an Iran-driven oil-price rise could worsen Japan’s terms of trade again, but net trade terms have improved in recent years. Capital Economics forecasts USD/JPY at 150.00 by end-2027.