USD/JPY: Risks remain to the downside - Westpac

Robert Rennie, Research Analyst at Westpac, suggests that they have stuck with a negative view on USD/JPY for the last couple of weeks on the basis the ¥ is cheap; the US$ has not been able to garner much support from Fed expectations and risk sentiment is under pressure.

Key Quotes

“To this list we can obviously add the risks of a tariff/ trade war and a further deterioration in risk sentiment as a result!”

“Thus we remain of the view that risks remain to the downside for USD/JPY over the coming month.”

“However, the BoJ is likely to stick with current guidance on YCC/ APP and thus push back on any expectations of a near term shift in policy. This plus a sense that 105 could be seen as something of a ‘line in the sand’ should help stabilise USD/JPY over the next week.”

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