Goldman Sachs said that the reason for tactical lengthening of the yen has been strengthened after the recent strengthening of the yen due to market expectations that the Bank of Japan will tighten monetary policy, possible changes in Japanese capital flows, and the risk of further intervention. “Looking at the longer cycle, asymmetry has improved markedly, and shorting USD/JPY has become a long-lost and more attractive hedging strategy for risk-prone portfolios,” strategists including Kamakshya Trivedi wrote in the report. Goldman Sachs pointed out that Bank of Japan Governor Kazuo Ueda “basically confirmed” the “expectations” of the market's interest rate hike in September, while speculations that the Japanese government pension investment fund might shift asset allocation to domestic assets have increased the prospects for a reduction in capital outflows. Although the global context still holds back against the yen and “should continue without concerns about growth,” supportive domestic policy shifts “after being a major source of downward pressure should now have a greater impact.” Japanese policymakers “appear to be working to attract capital inflows using existing instruments,” while leaving plenty of room for further intervention.

Goldman Sachs said that the reason for tactical lengthening of the yen has been strengthened after the recent strengthening of the yen due to market expectations that the Bank of Japan will tighten monetary policy, possible changes in Japanese capital flows, and the risk of further intervention. “Looking at the longer cycle, asymmetry has improved markedly, and shorting USD/JPY has become a long-lost and more attractive hedging strategy for risk-prone portfolios,” strategists including Kamakshya Trivedi wrote in the report. Goldman Sachs pointed out that Bank of Japan Governor Kazuo Ueda “basically confirmed” the “expectations” of the market's interest rate hike in September, while speculations that the Japanese government pension investment fund might shift asset allocation to domestic assets have increased the prospects for a reduction in capital outflows. Although the global context still holds back against the yen and “should continue without concerns about growth,” supportive domestic policy shifts “after being a major source of downward pressure should now have a greater impact.” Japanese policymakers “appear to be working to attract capital inflows using existing instruments,” while leaving plenty of room for further intervention.