Comment: Yen moves in Q1 2008 were faster and bigger than we had expected but we have now moved into the corrective phase we had predicted for Q2. This has been dominated by a cautious counter-trend rally moving back up towards 110.00/111.00. Consolidation below here and above 100.00 for much of Q3 is our favoured view, prior to another downside test of key support between 100.00 and 95.00 in Q4. Note that all of the above assumes relatively orderly markets. Should the ‘carry trade’ unwind we would pencil in a bigger and longer drop to 85.00 in Q1 2009 followed by a bounce back up to 100.00 in Q2 2009.
A week close above 113.00 forces a review.
