Barclays said the yen’s recent rally could reverse and USD/JPY may move back
above 150 if expectations for faster BOJ tightening disappoint and Japanese
Pension funds fail to shift into domestic assets as anticipated. Barclays
strategists led by Shinichiro Kadota said recent yen strength was driven by bets
on BOJ policy tightening, speculation over pension fund flows and technicals.
The bank warned further gains may require the BOJ to deliver a hawkish
surprise relative to already elevated expectations. Barclays added that
interest-rate differentials, a Japanese equity risk premium, concerns about
Sanae Takaichi’s policy stance and persistent structural yen-selling flows
remain headwinds to sustained appreciation.