Viraj Patel, Research Analyst at ING, suggests that it’s a brave move to bet against the JPY in a world of Trumpian uncertainties and a breather in USD/JPY’s year-to-date bearish trend isn’t surprising given the sharp swing in JPY positioning that has occurred over this period (speculative markets moved from 54% net JPY short to 2% net JPY long).
“While FX markets seem to be shrugging off any global trade or geopolitical flare-ups for now, we remain wary that we’re one move (or tweet) away from any escalation that could bring about a broader flight-to-safety. Japanese politics should also be added to the list of reasons for seeking haven in JPY – with PM Abe’s approval ratings at their lowest since Dec 2012, and ex-PM Koizumi stirring up the resignation rumours, it’s certainly a far from settled domestic political backdrop. USD/JPY could trade firm ahead of a crucial April BoJ meeting, but we remain sellers on any rallies.”
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