USD/JPY: we are positioning ourselves against the current consensus for 2018 (TD Securities)

Here are TD Bank's forecasts for the USD/JPY for next year:

"The consensus is that the USD/JPY will be at 115 in 2018 while we think it will be at 104. Many observers continue to focus on rate differentials rather than the regime shift that has propelled the euro this year.

Our long-term valuation models suggest that the JPY remains a cheap currency, one of the least expensive among the G10 FX while its huge balance of payments deficit highlights the massive stock of outsourced capital. The BoJ will probably tighten its monetary policy next year and this could trigger a regime change. The JPY could then appreciate sharply.

We maintain our bearish position initiated at 111.85 with 107 as a target and a stop loss loss at 114.80."