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USD/JPY to hit the roof before cyclical peak of Dollar index in 2017 – Deutsche Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 22, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Taisuke Tanaka, Strategist at Deutsche Bank, believe that the USD/JPY could reach a ceiling in 2016 prior to the dollar's overall projected peak in 2017.

    Key Quotes

    “A super-cycle can be observed in the USD (trade-weighted rate) showing a downtrend of 9-10 years and uptrend of around 6.5 years. The downward cycle since 2002 had lasted nine years when an upswing in the US housing market finally pointed to an autonomous recovery in the economy after the financial crisis. We saw in April 2012 that the dollar would start an up-cycle.”

    “Our economists forecast US GDP growth of 2.4% in 2015, 2.5% in 2016, and 2.8% in 2017, along with Fed rate increases in March and June next year and multiple hikes in 2017. If the dollar should rise through 2017 on the solid US recovery and rate hikes, it would match the upward 6.5-year super-cycle.”

    “The USD/JPY has strengthened 60% in the current cycle. The prime engine has been the robust US economy, with the BoJ's QQE as a supplementary engine and further support in the form of foreign securities purchasing by pension funds. US growth is now less vibrant than expected, BoJ monetary policy has reached an impasse, pension buying has passed its peak, and EM and resource-rich nations are struggling in line with the dollar's rise.”
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