USD/JPY will fall to 95 in 3Q16 - ING

Research Team at ING, notes that the Japanese upper house election yielded a resounding victory for PM Abe and his coalition partners, which has now gained the two-thirds "supermajority" required to change Japan's post-war constitution.

Key Quotes

“Moreover, Abe's strengthened grip on governance will make it easier to push ahead with (a) delaying the sales tax hike due to take effect in Apr 2017 and (b) promoting fiscal spending in the Autumn supplementary budget.

While hopes for economic stimulus have lifted Japanese stocks (and weighed on the yen), we think that Abenomics 2.0 may prove to be more direct in achieving growth and could counterintuitively be JPY positive in the near-term. We reaffirm our view that USD/JPY will fall to 95 in 3Q16.”