Yen to stay strong for rest of year

The Japanese yen will remain strong for the rest of this year on expectations other major central banks will crank up money printing to support their economies, a recent Reuters poll showed. The poll forecast the yen would then start to weaken early in 2013.
A poll of more than 60 strategists taken between June 29 and July 3 showed the US dollar trading at 80 yen between now and September, around where it was trading earlier on Tuesday. In a year's time, it is expected to weaken to 84 yen per dollar. Those expectations are roughly unchanged from a similar survey last month, underscoring analysts' reluctance to change their forecasts for a currency that is sought after by investors and speculators who want to avoid risky assets. "The re-intensification of European macro stress combined with a general deterioration in growth data in the US and in non-Japan Asia suggests that dollar/yen will likely remain under pressure in the near term," said Peter von Maydell, currency strategists at Credit Suisse. "We expect the Bank of Japan to expand its asset purchase program. We however expect limited impact on the dollar/yen price in the absence of a shift in Fed policy expectations, and of a consequent move higher in US bond yields."
Data on Monday showed US manufacturing contracted for the first time in three years in June. With the euro zone and British economies not growing, expectations those central banks will start printing more money are on the rise. While the Federal Reserve last month extended its "Operation Twist" programme under which it seeks to reduce long-term borrowing costs, the Bank of England is expecte d to pump an additional 50 billion pounds into the financial system at its meeting on Thursday.
"The BoJ should continue to be more aggressive in terms of monetary policy easing to keep the yen from appreciating since other countries are moving more aggressively than t hey are," said Robert Sinche, global head of currency strategy at Royal Bank of Scotland.
The BoJ has acted to keep the yen from strengthening beyond limits deemed dangerous for Japan's export-oriented economy, since the country was struck by a massive earthqu ake, tsunami and nuclear crisis in March 2011.