AUD/JPY to grind higher towards 83.00 by year-end – Westpac

Economists at Westpac stay neutral near-term on AUD/JPY but note that the pair has upside potential multi-week/month if Australia remains on track for the high vaccination rates. There is scope for 83 by end-2021.

AUD/JPY to advance nicely towards 86 by end-2022

“Recovery in Q4 relies on state premiers loosening restrictions substantially once vaccination rates hit benchmarks. Our base case is for a sharp rebound late in Q4 into Q1, supporting A$ crosses.”

“The RBA is tapering QE slightly but it still projects a 0.1% cash rate until 2024. The BoJ has pulled back its QE pace without fanfare but its 0.0% 10 year JGB target will ensure A$’s modest yield pickup versus JPY doesn’t shrink much further. Japan is also struggling with an upswing in covid cases.” 

“If Australia achieves the high vaccination rates we believe possible, then AUD/JPY should chop up to 83 by end-2021 and 86 by mid-2022.”