USD/JPY to move largely sideways, before declining modestly over 2024 – HSBC

USD/JPY continues to hold just below 150. Economists at HSBC analyze the pair’s outlook.

Ongoing improvement in Japan’s current account balance will provide some support for the JPY

Our base case is that USD/JPY is likely to move sideways for an extended period of time, before declining modestly over 2024, amid our expectations of narrowing (but still large) yield differentials. 

We also think the ongoing improvement in Japan’s current account balance will provide some fundamental support for the JPY. Indeed, Japan’s merchandise trade balance swung to a surplus in September, reflecting healthy export gains (supported by JPY weakness).