7 Aug 2015
EUR/JPY poised for further downside – Rabobank
FXStreet (Edinburgh) - According to Jane Foley, Senior Currency Strategist at Rabobank, the cross is expected to grind lower in the upcoming months.
Key Quotes
“The Bank of Japan continues to promote an optimistic outlook for the Japanese economy”.
“In a speech late in July Deputy Governor Nakaso reported that the “virtuous cycle from income to spending is becoming more evident in both the corporate and household sectors”.
“Although softer oil prices and a weaker yen have been a boon to the corporate sector in general it is clear that slowing growth in China is a risk for Japanese export sector”.
“Even though industrial production bounced in June, the recovery was not strong enough to rule out a contraction in the sector in Q2 and the market sees risk that the Japanese economy could shrink in the quarter”.
“Even though the BoJ has been making no indication that it is considering boosting the size of its QE plan, the market has been reluctant to rule out the risk of a move later in the year and the outlook for the Chinese economy could be a determining factor”.
“That said, under the weight of the ECB’s QE plan we expect EUR/JPY to trend moderately lower medium-term”.
Key Quotes
“The Bank of Japan continues to promote an optimistic outlook for the Japanese economy”.
“In a speech late in July Deputy Governor Nakaso reported that the “virtuous cycle from income to spending is becoming more evident in both the corporate and household sectors”.
“Although softer oil prices and a weaker yen have been a boon to the corporate sector in general it is clear that slowing growth in China is a risk for Japanese export sector”.
“Even though industrial production bounced in June, the recovery was not strong enough to rule out a contraction in the sector in Q2 and the market sees risk that the Japanese economy could shrink in the quarter”.
“Even though the BoJ has been making no indication that it is considering boosting the size of its QE plan, the market has been reluctant to rule out the risk of a move later in the year and the outlook for the Chinese economy could be a determining factor”.
“That said, under the weight of the ECB’s QE plan we expect EUR/JPY to trend moderately lower medium-term”.