The current median year-end estimate for USD/JPY by analysts surveyed by Bloomberg is 105, or slightly more than 5% above current levels, but the average of the aforementioned UBS and Commerzbank forecasts is 112.50. Even if USD/JPY rallies 10% from current levels, that would be result in a price below the UBS and Commerzbank estimates, but above consensus. Still, that would be enough to ignite a substantial rally in Japan ETFs.
From Nov. 10, 2012 through July 11, 2013, USD/JPY is up nearly 25%, but in a sign of DXJ’s potency relative to the currency pair, the ETF is up almost 54% since Nov. 12, 2013.
WisdomTree Japan Hedged Equity Fund
ETF Trends editorial team contributed to this piece. Tom Lydon’s clients own shares of DXJ.