Sean Callow, Research Analyst at Westpac, suggests that after having returned to an upward bias on USD/JPY last week, they are reasonably content with the price action – up about 0.5% including a test of 113.
“The brief slide under 112 on Friday however was a reminder of the pair’s eternal risk sensitivity, with the lows coming on the headlines over Flynn/ Trump/ Russia.”
“This is a caveat every week, perhaps a little more so while speculative positions remain substantially long USD/JPY, at least according to CME data.”
“But overall, we stick to a positive outlook for the week and month, with scope for trade in the mid-113s if US 2 year yields push higher with help from the FOMC rate hike and forecasts, plus further progress on the tax cut bill(s).”
“JGB yields should remain anchored by the BoJ’s dedication to YCC – adjusting purchases to market conditions.”
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