4 Jun 2015
Barclays: What now for USD/JPY? – eFXnews
FXStreet (Barcelona) - According to Barclays, with USD/JPY having seen a sharp move to the upside, conditions ahead state that the pair might not necessarily match any stronger USD moves ahead, as noted by eFXnews.
Key Quotes
“While further widening in yield differentials and/or gains in Japanese stocks could have some bearing on USDJPY, there are a number of countervailing factors that would limit its decline. Firstly, a sharp weakening in the JPY versus USD would be politically unpalatable to Japanese officials, and secondly the JPY already appears very cheap according to our valuation metrics.”
“In fact, two of the large USDJPY rallies (of over 10% q/q) in the past few years occurred during episodes of sharp JPY depreciation, driven by expectations for and actual BoJ easing, which we think is unlikely to come any time soon.”
“Finally, if risk aversion increases, whether due to Greece or other reasons, we believe the JPY would benefit from renewed safe haven demand.”
“This suggests to us that even if the current USD move extends further, as we expect, it does not necessarily mean that USDJPY will move with it."
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“While further widening in yield differentials and/or gains in Japanese stocks could have some bearing on USDJPY, there are a number of countervailing factors that would limit its decline. Firstly, a sharp weakening in the JPY versus USD would be politically unpalatable to Japanese officials, and secondly the JPY already appears very cheap according to our valuation metrics.”
“In fact, two of the large USDJPY rallies (of over 10% q/q) in the past few years occurred during episodes of sharp JPY depreciation, driven by expectations for and actual BoJ easing, which we think is unlikely to come any time soon.”
“Finally, if risk aversion increases, whether due to Greece or other reasons, we believe the JPY would benefit from renewed safe haven demand.”
“This suggests to us that even if the current USD move extends further, as we expect, it does not necessarily mean that USDJPY will move with it."
This content has been provided under specific arrangement with eFXnews.