USD/JPY: Yen remains the best of the rest in G10 – MUFG

Matías Salord FXStreet

Analysts at MUFG Bank, point out that with the Federal Reserve having addressed USD liquidity issues, they see the path opening up for USD/JPY to grind back lower over the coming weeks.

Key Quotes:

“The huge demand for US dollars even overwhelmed the usual favoured safe-haven currency, the yen, which resulted in USD/JPY going higher during the extreme risk off period. But we have had evidence this week to suggest this has been addressed. The JPY cross-currency basis has jumped this week from the low-point on 19th March to revert to more normal levels. That followed a USD take-up at the BoJ dollar supplying operation of USD 67.2bn. But we cannot downplay the scale of Fed actions and we believe those actions will play out most clearly in USD/JPY – and hence we see further downside risks for USD/JPY.”

“Cheap hedging costs could see greater hedging by GPIF also while, we would only see notable GPIF support at lower USD/JPY levels. With the Fed having addressed USD liquidity issues, we see the path opening up for USD/JPY to grind back lower over the coming weeks.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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