Goldman Sachs cuts yen forecast to 165 per dollar, boosting carry trade appeal as hawkish Fed and dovish BOJ widen yield gaps.
Goldman Sachs cut its yen forecast to 165 per dollar and recommended carry trades, implying sustained yen weakness. The forecast reflects expectations of a widening interest rate gap between the Fed and BOJ, driving USD/JPY higher.
Goldman sees the yen weakening to 165 per dollar, implying USD/JPY has room to rise from current levels. Their bullish carry trade view suggests continued demand for dollars against the yen.
The forecast is based on expectations of sustained interest rate differentials. Traders may consider the carry trade but should watch for BOJ intervention or policy shifts that could abruptly strengthen the yen.
Key risks include the Bank of Japan accelerating rate hikes or the Federal Reserve cutting rates sooner than expected, which could narrow the yield gap and undermine the carry trade.
Goldman Sachs revised its yen forecast to 165 per dollar, citing favorable conditions for carry trades. The move signals renewed pressure on the Japanese currency amid widening interest rate differentials. Analysts expect the yen to weaken further as the Bank of Japan maintains accommodative policy while the Federal Reserve holds rates high.
Goldman Sachs expects the yen to weaken to 165 per dollar, reflecting their bearish outlook on the Japanese currency.
The bank sees carry trades as attractive because the yen’s low interest rates allow traders to borrow cheaply and invest in higher-yielding currencies, benefiting from the interest rate differential.
It suggests the BOJ may struggle to normalise policy quickly, as yen weakness could persist, potentially complicating efforts to control inflation.