12 Nov 2013
Flash: JPY in spotlight as USD and Risk appetite rises - Societe Generale
FXstreet.com (Barcelona) - Kit Juckes, Global Head of Currency Strategy at Societe Generale notes that a guest on BBC Radio 4 in the UK this morning suggested that the possibility that the Fed would increase the pace of bond-buying in the New year, rather than slowing it, was a reason for the Dow Jones reaching a new high last night.
Key Quotes
“And yet when I arrived at work I found the 30-year Bond yield quoted at 3.88%, only a handful of basis points off the summer ‘taper frenzy’ highs. The combination of rising yields and rising equity indices is risk, and dollar friendly. That puts the spotlight on the yen, which has weakened as the US/Japanese yield spread widens.”
“Psychologically, USD/JPY 100 is the key resistance level, of course. I suspect it will break. Stay short JPY vs NZD and CAD though AUD is failing to join in the general risk rally and isn’t helped by a dip in business confidence as measured by this morning’s NAB survey.”
Key Quotes
“And yet when I arrived at work I found the 30-year Bond yield quoted at 3.88%, only a handful of basis points off the summer ‘taper frenzy’ highs. The combination of rising yields and rising equity indices is risk, and dollar friendly. That puts the spotlight on the yen, which has weakened as the US/Japanese yield spread widens.”
“Psychologically, USD/JPY 100 is the key resistance level, of course. I suspect it will break. Stay short JPY vs NZD and CAD though AUD is failing to join in the general risk rally and isn’t helped by a dip in business confidence as measured by this morning’s NAB survey.”