Goldman Sachs Flips Bullish on Yen, Sees 150 Per Dollar Within Year

Goldman Sachs has changed its outlook on the yen, reversing its bearish call from July and now expecting it to trade at 150 per dollar within the next year. The bank's strategist, Karen Reichgott Fishman, cited a faster pace of Bank of Japan rate increases as one reason for the change in view. This quicker tightening has blunted the inflation impulse tied to fiscal expansion and relieved some strain on the currency.

Fishman also highlighted a greater likelihood that domestic portfolio flows return to Japanese assets, creating 'downside asymmetry' in USD/JPY. While this shift is still uncertain, it makes the yen more appealing as a hedge, especially against recession fears.

The market backdrop shows Bank of America shifting its own view earlier to 149 per dollar by year end, and spot markets have seen the yen hit 158.28 per dollar on Friday following comments from Finance Minister Satsuki Katayama. Goldman still carries a cautious tactical bias now and prefers being short EUR/JPY.