Robert Rennie, Research Analyst at Westpac, explains that with various Fed speakers all singing from the same “appropriate soon” song sheet, the US$ leg looks like it has found a base here but risks from Dutch and French elections and of course the odd ‘twitter bomb’ leave the ¥ leg a near term risk and thus he stick with the view that USD/JPY remains a buy on dips.
“Two weeks ago we shifted that dip level up from 110/112 to 111/113, and that strategy has worked well. We maintain then same levels this week.”
“What would force us to change our minds and switch to an outright buy? A March Fed hike; a market-friendly outcome in the French elections and the BoJ stepping back from the ¥80tn asset purchase target. Until either or all of those happen, we stick to a buy the dip rather than outright buy.”
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