Goldman Sachs analysts, led by Kamakshya Trivedi, suggest that the yen's recent appreciation has been driven by speculation about potential policy changes from the Bank of Japan (BOJ). However, dissent among BOJ board nominees regarding rate hikes has created uncertainty about a significant policy shift that could bolster the yen.
They highlight that comments from BOJ Governor Ueda indicate a reluctance to act quickly, setting a high threshold for any rate increase in October. Additionally, Goldman notes that the global economic environment, particularly potential Federal Reserve rate hikes, is likely to exert downward pressure on the yen.
They recommend a strategy of being long on the yen against the euro rather than the dollar, emphasizing that any significant reallocation of Japanese investors' foreign assets will be gradual. The analysts also point out that without intervention or clear signs of a portfolio shift, there are no immediate catalysts for yen strength