The Year Of The Yen: The Dollar Does Not Look "Beautiful".

After the sharp fall in the 16 major currencies in the three years to the end of 2014, the market sees signs that the way the Japanese central bank has stepped up its monetary stimulus may have come to an end, and the yen has stabilized this year.

The yen is currently near 120. Since last December, the yen has fallen by less than 3% against the US dollar, compared with a 36% decline in the previous three years.

Last Sunday, the central bank launched a new stimulus, but not to expand QQE, but to make the QQE plan a more successful subsidiary.

The market has sharply cooled the expectations of the Japanese central bank to further expand its easing policy, resulting in a sharp rise in the yen.

The rally is still continuing.

Two weeks ago, J.P. chase, which gave us dollar / yen target price at the end of next year, will now reach 110. Now it reiterates this forecast and further proposes that the Japanese yen's equilibrium exchange rate is even lower than 100. However, the Japanese economy will not suffer too many shocks due to the strong Japanese yen. "Morgan"

J.P. Morgan's reason is that Japan's current account surplus is growing and it has risen to its highest level in 2008 this year, which weakened the ability of the Bank of Japan to suppress the yen through monetary stimulus, while the yen was severely undervalued against the US dollar in March.

Bloomberg quoted Tohru Sasaki, head of Japan's market research at JP Morgan chase, as saying that after the Japanese central bank's weighted exchange rate index fell to its 8 year low in June this year,

Have been substantially underestimated.

The Bloomberg consumer purchasing power parity index also showed that the yen was undervalued by 39% against the US dollar, the largest undervalued in the major currencies.

This prediction coincides with Morgan Stanley.

At the beginning of this month, Morgan Stanley called 2016 the year of the yen, and thought that the yen to us dollar exchange rate would soar to 115 at the end of 2016.

Morgan Stanley explained that the market overestimated the future easing intentions of the Bank of Japan, and the Bank of Japan has gradually changed its stance from easing monetary easing to easing reluctance, which has not yet been reflected in the foreign exchange market.

In the 2016 outlook, which was released this month, most analysts of the major banks expect the dollar to rise further, but the forecast is far smaller than a year ago, and the consensus on which currencies the US dollar will rise is also reduced.

Simon Smith, chief analyst of retail trading platform FXPro, said: "the dollar has been doing well this year, but when the 2016 comes, few people think that the dollar will reappear in 2015."

Goldman Sachs, a leading international investment bank, said that as the US economy moves towards full employment and inflation, the US dollar will further strengthen, while the main rival currencies, the euro and yen, will continue to remain weak.

"So far, the US economy has shown resilience in the face of the strength of the dollar, which makes us believe that the Fed will further tolerate the strength of the US dollar.

In view of this, coupled with the moderate stance of the European Central Bank (ECB) and the BOJ (Japan Central Bank), they find themselves far from the policy objective. We may see that the euro and the yen dollar continue to weaken in 2016.

However, we weakened our expectations for the euro, mainly based on the ECB meeting in December.

However, the latest survey released by Bloomberg on Thursday shows that in the first quarter of next year, the US dollar will rise all the way against G-10 and the New Zealand dollar will bottom out in addition to the pound and the Canadian dollar.

Since the fourth quarter of this year, the US dollar index has risen 1.9%.

The Bloomberg survey is expected to rise by 2.5% in the first quarter of next year.

According to Peng Bo's compilation of futures trading data, the chances of raising interest rates by the fed in March and April were 48% and 55% respectively.

In the first quarter of next year, the US dollar is expected to strengthen against most major currencies, and the New York dollar will lose about 6% against the US dollar, according to a survey expected by analysts in Bloomberg.

But Canadian dollar and pound or accident, the Canadian dollar will appreciate by about 2%, and the pound will rise by about 1.5% against the US dollar.

Brown Brothers Harriman & Co.

Murata Masashi, vice-president of Tokyo, said, "the best way to support the US dollar is to invest in the US.

The latter is also the reason leading to the division of monetary policy in Europe and the United States.

The biggest premise for next year's exchange rate forecast is the upward trend of the US dollar.

Any other G-10 currency is hard to beat the dollar. "

The euro / dollar rose slightly on Thursday, reaching a maximum of 1.0966, but the exchange rate encountered a single resistance at the 1.0940 level, and the short line faced withdrawing pressure.

In addition, although crude oil has been down for the last two trading days, a series of downturns in recent eight months have also triggered concern in the market. The decline in oil prices triggered a risk aversion demand and boosted yen buying demand.

Kuroda Higashihiko, the governor of the Bank of Japan, said on Thursday that "the central bank's determination has not wavered and will take all measures to defeat deflation and achieve a 2% inflation target." (Haruhiko Kuroda)

Some people may still be suspicious now.

But after the implementation of QQE, the trend of economy and price has changed significantly.

This is an indisputable fact.