They explain that “We booked profits on GBPJPY and MXNJPY last week, and today – following a decent move higher in USDJPY -- we are looking to also book profits on NZDJPY (which is up around 2% since entry)”
The reasons for doing so are:
Risk assets have rallied sharply in recent weeks and positive risk events such as the ECB,ESM and FED have all passed. In Europe, there is still the question of the formal Spanish application for aid whilst growth indicators around the world are starting to point towards the downside.
They conclude that “From a JPY perspective, we acknowledge that the likelihood of monetary easing by the BOJ is gradually rising as the Fed embarked on its new QE and conflict with China adds further uncertainty to the economic outlook. However, our main scenario remains no additional easing by the BOJ this week, as USDJPY is trading favourably. As expectations of additional easing this week remain, we think the market is likely to be disappointed by the Bank again, sending yen-crosses lower.”