8 Apr 2015
Specs less inclined to hold JPY shorts as likelihood of further BoJ easing remains low – RBS
FXStreet (Barcelona) - The Global FX Strategy Team at RBS explains that the recent positioning data justifies that investors are less inclined to hold short positions on the JPY as BoJ is not expected to ease into Q4’15, which will only increase deflationary risks.
Key Quotes
“The spec short base fell 21k on the week (~48%) to 23.9k. This is the smallest speculative short position in almost 30 months. It seems Levered Money has been at the forefront of the move, cutting shorts and by 14k last week. Asset managers are almost flat."
“We still believe speculators are less inclined to hold short positions here given low likelihood of further BOJ easing into Q4’15.”
“Being short EUR, GBP and AUD have been more rewarding positions as USDJPY has remained mostly range-bound since Nov’14.”
“That said, we take last week’s comments from one of PM Abe’s key advisers - Mr. Yamamoto – seriously. He stated that "the economy is at a standstill and prices are seen falling ahead, to do nothing isn't an option for the BOJ [and] further monetary easing [is] absolutely essential to ensure that the Japanese don't slip back to a deflationary mind set".”
Key Quotes
“The spec short base fell 21k on the week (~48%) to 23.9k. This is the smallest speculative short position in almost 30 months. It seems Levered Money has been at the forefront of the move, cutting shorts and by 14k last week. Asset managers are almost flat."
“We still believe speculators are less inclined to hold short positions here given low likelihood of further BOJ easing into Q4’15.”
“Being short EUR, GBP and AUD have been more rewarding positions as USDJPY has remained mostly range-bound since Nov’14.”
“That said, we take last week’s comments from one of PM Abe’s key advisers - Mr. Yamamoto – seriously. He stated that "the economy is at a standstill and prices are seen falling ahead, to do nothing isn't an option for the BOJ [and] further monetary easing [is] absolutely essential to ensure that the Japanese don't slip back to a deflationary mind set".”