2 May 2016
JPY strength likely to continue – Danske Bank
Chief Analyst at Danske Bank Jakob Christensen sees the Japanese currency gathering further traction in the next periods.
Key Quotes
“The broad USD weakened further following the FOMC decision mid-last week. We believe the trend is likely to continue near term versus EM and JPY”.
“Following the clean break of the previous low at 107.63 we see limited support for USD/JPY near term and see the risks to the downside”.
“The IMM positioning suggests that the market is substantially short USD/JPY but if one splits the data by investor type, the picture changes. Leverage funds are very long JPY but asset managers are short”.
“Moreover, Japanese investors have been significant buyers of foreign bonds in recent weeks. All in all, this suggests that positioning may not be much of a constraint for further near-term JPY strength”.
“Late NY Friday session, the US Department of the Treasury released a new report to the Congress where it named Japan on a ‘Monitoring List’ over its external surpluses and currency policies, alongside four other countries. This supports further JPY appreciation although we think it is possible that the Japanese authorities could intervene in the FX markets if USD/JPY breaks 100”.
Key Quotes
“The broad USD weakened further following the FOMC decision mid-last week. We believe the trend is likely to continue near term versus EM and JPY”.
“Following the clean break of the previous low at 107.63 we see limited support for USD/JPY near term and see the risks to the downside”.
“The IMM positioning suggests that the market is substantially short USD/JPY but if one splits the data by investor type, the picture changes. Leverage funds are very long JPY but asset managers are short”.
“Moreover, Japanese investors have been significant buyers of foreign bonds in recent weeks. All in all, this suggests that positioning may not be much of a constraint for further near-term JPY strength”.
“Late NY Friday session, the US Department of the Treasury released a new report to the Congress where it named Japan on a ‘Monitoring List’ over its external surpluses and currency policies, alongside four other countries. This supports further JPY appreciation although we think it is possible that the Japanese authorities could intervene in the FX markets if USD/JPY breaks 100”.