JPY: Downside risks - Westpac

Sandeep Kanihama FXStreet Contributor

Robert Rennie, Research Analyst at Westpac, suggests that they made a very clear point last week that “the Japanese authorities have done a great job of hitching the ¥ in a fairly tight 109 to 114 range to a sharply weakening US$”.

Key Quotes

“This slump in the US$ has dragged “our real effective measure of the ¥ model [to be] only 6% above the ‘record’ lows seen mid 2015, a clear indication of just how significant the depreciation has been”.”

“Thus, we argued, if the US$ did break lower, USD/JPY would have to shoulder more of this weight. Importantly, the Japanese authorities had done little to voice concerns about such a move.”

“Finance Minister Aso added some weight to this view, noting that the apparent goldilocks conditions for the ¥ being “not too strong or weak”.”

“We thus stick to our ‘downside risks’ view for USD/JPY for another week.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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