Nomura flags risk of sharp yen rally on U.S.-Japan policy pressure

As Japan's investors shift away from U.S. assets due to rising yen yields and pressure on the exchange rate amid trade talks, investment bank Nomura predicts the yen could surge 6% against the dollar in the next six months. The trio at Nomura suggests shorting the yen/USD pair, targeting a move to ¥136 by mid-September from its current level of ¥145. They note that the Bank of Japan's ongoing rate hikes may encourage domestic investors to tilt more toward local bonds over foreign ones, while also warning that U.S.-led dollar concerns could intensify if the yen weakens during sensitive trade negotiations.