USD/JPY: Narrow ranges to persist – JP Morgan
|In the latest client note, the analysts at JP Morgan argued that the Japanese yen is seen losing its safe-haven status over the last three years.
Key Quotes:
“USD/JPY annual range of less than 10% for three consecutive years.
2019 range less than 8%, the smallest since 1980.
When a risk-on mood was strong, market participants would normally actively engage in the yen-carry trade.
But when risk-off hit "investors would be pressed to close their positions" - to sell the higher-yield currency & buy back yen they had sold, which is why the yen would strengthen in risk-off environments.
But because in recent years the yen is no longer being sold off in the first place, it is not acting as much like a safe-haven currency as in the past.
If interest rates increase in other countries (opening a wider gap with rates in Japan) would encourage yen-carry trades.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.