Yen seen losing ground as risk appetite returns

The Japanese yen will lose ground against the dollar over the coming year as investors become more bold with their recovery bets, the latest Reuters poll of foreign exchange strategists found on Wednesday.
The poll of around 60 strategists, taken this week, saw the dollar trading in line with current levels at around 96 yen in a month, 100 in six months and 103 in a year. This is weaker than in a May poll which saw the yen at 103 and 105 in six and 12 months ahead respectively.
However, the forecast range was relatively wide, as is usual in this poll. Fifteen economists saw the yen weaken to above 110 per dollar in a year, while 25 saw the Japanese currency at or below 100.
Global economies have been battered over recent quarters but many economists say the worst may have now passed.
Japan was the hardest hit due to its exposure to the collapse in world export markets and what was a very strong currency, but it too has probably turned a corner.
"The ongoing prospect of a recovery in global growth and improving financial market conditions will continue to fuel a reversal of prior safe-haven flows ... , exacerbating yen weakness," said Lee Hardman at BTMU.
Whether the depreciation of the yen is as orderly as the poll suggests remains to be seen, although the survey indicated that volatility levels would fall this month.
The yen's outlook against the euro was far more opaque, with cross rates calculated by Reuters showing 12-month forecasts ranging from 114 to 165 per euro.
In three months the poll predicts the yen will be at 135 per euro, compared with 131 in May's poll and the 137 it was at earlier on Wednesday.
FRANC FRANKLY FLAT
The Swiss franc is not expected to move dramatically from current levels if the consensus forecast, which is generally flat, proves correct.
Median forecasts for each point through the 12-month horizon ranged from 1.08 to 1.12 francs per dollar, stronger than in the May poll. Twelve-month forecasts were wider, ranging from 0.95 to 1.35 per dollar.
"USD-CHF performance will mostly depend on EUR-CHF moves and on high risks of new Swiss National Bank forex intervention," said Roberto Mialich at UniCredit MIB.
The Swiss central bank has repeatedly warned it would fight a rise in the Swiss franc "resolutely" to keep the country out of deflation. The SNB intervened to weaken the franc in March when it announced a set of drastic steps to boost the economy and fend off deflation.
Against the euro the Swiss franc was seen trading at 1.52 in a month, 1.53 in three months and 1.56 in 12 months, compared with the 1.52 it was at earlier on Wednesday