7 Jul 2015
Japan: Biggest monthly USD/JPY buying by margin traders – Nomura
FXStreet (Barcelona) - After recording the highest net-selling as of end-May, margin traders bought USD/JPY to the tune of $6.5bn on June, all of this suggests that the downside for the pair remains protected, according to Yujiro Goto, FX Strategist at Nomura.
Key Quotes
“Based on data released by a Japanese margin trading company, Japanese margin traders bought USD/JPY aggressively last Monday and Tuesday, as they are usually contrarians in the FX market. We estimate margin traders bought USD/JPY to the tune of JPY805bn ($6.5bn) on 29-30 June.”
“Margin traders’ USD/JPY position recorded the biggest net selling ever, as of end- May, according to the Financial Futures Association Japan. Their positions reached JPY245bn ($2.0bn) of net selling as of end-May. However, as USD/JPY dipped several times during June, after Governor Kuroda’s comments on JPY REER, the dovish FOMC and the Greek decision to hold a referendum, margin traders bought USD/JPY on dips in June.”
“We estimate USD/JPY positions as of end-June recovered to JPY1730bn ($14.0bn), and total USD/JPY purchases during the month reached a record amount of nearly JPY2trn ($16bn). Since then, USD/JPY position declined slightly later last week, while margin traders’ USD/JPY buying demands are likely to remain high this week as USD/JPY has dipped again.”
“The latest developments on the Greek situation cause uncertainty for USD/JPY outlook, but retail investors’ demands for JPY selling via toshins and margin trading look strong. Strong JPY selling from Japanese investors should limit the downside risk of USD/JPY, while the pricing of a Fed rate hike at the moment is conservative. We continue to recommend holding a USD/JPY long bias over the next few months.”
Key Quotes
“Based on data released by a Japanese margin trading company, Japanese margin traders bought USD/JPY aggressively last Monday and Tuesday, as they are usually contrarians in the FX market. We estimate margin traders bought USD/JPY to the tune of JPY805bn ($6.5bn) on 29-30 June.”
“Margin traders’ USD/JPY position recorded the biggest net selling ever, as of end- May, according to the Financial Futures Association Japan. Their positions reached JPY245bn ($2.0bn) of net selling as of end-May. However, as USD/JPY dipped several times during June, after Governor Kuroda’s comments on JPY REER, the dovish FOMC and the Greek decision to hold a referendum, margin traders bought USD/JPY on dips in June.”
“We estimate USD/JPY positions as of end-June recovered to JPY1730bn ($14.0bn), and total USD/JPY purchases during the month reached a record amount of nearly JPY2trn ($16bn). Since then, USD/JPY position declined slightly later last week, while margin traders’ USD/JPY buying demands are likely to remain high this week as USD/JPY has dipped again.”
“The latest developments on the Greek situation cause uncertainty for USD/JPY outlook, but retail investors’ demands for JPY selling via toshins and margin trading look strong. Strong JPY selling from Japanese investors should limit the downside risk of USD/JPY, while the pricing of a Fed rate hike at the moment is conservative. We continue to recommend holding a USD/JPY long bias over the next few months.”