According to Jinshi, HSBC strategists Joey Chew and Paul Mackel said that HSBC lowered its forecast for the US dollar against the yen, believing that the safe-haven property of the yen is re-strengthening and the Federal Reserve is preparing to start a rate cut cycle. The bank adjusted its forecast for the US dollar against the yen in the fourth quarter from 148 to 142, and adjusted its forecast for the second quarter of 2025 from 144 to 138.

Strategists also said that since the Federal Reserve is no longer in a rate hike cycle, the future trend of risk aversion is more likely to benefit the yen than in the past three years. The yen is now positively correlated with the VIX index and negatively correlated with the FTSE World Index and the 10-year U.S. Treasury yield.

The bank expects the Bank of Japan to raise its policy rate to 0.75% at the end of its rate hike cycle, and to raise its policy rate by two more 25 basis points in the first and third quarters of 2025.