5 May 2014
Arguments for long USD/JPY running very thin - Westpac
FXStreet (Bali) - The Westpac FX Team, who made a call for a higher USD/JPY last April 8th, has retracted from such bullish view, noting it no longer makes much sense.
Key Quotes
"Back on 8th April we argued that the prospects of a BoJ policy shift into Q3 would support gains in USD/JPY. However, a number of more recent events have compromised that view."
"Kuroda is currently 'talking down' the chances of further monetary policy developments in the near term."
"The situation in Ukraine has taken a very clear turn for the worse and could easily deteriorate further. The conflict could easily extend through into parts of neighbouring Moldova."
"Strong US data has simply failed to lift US yields and the US$."
"On April 8th, we recommended buying USD/JPY on dips (102.40, 101.80 and 101.20). However, arguments for being long USD/JPY right now are running very thin. We would thus recommend closing that long position at the current 102.10 level."
"We still feel that domestic data will continue to fall short of BoJ forecasts and that this cannot simply be blamed on offshore developments. However, being short the yen right now makes little sense to us. We would wait for a deeper correction and clearer signs of softer Japanese data before considering selling the yen again."
Key Quotes
"Back on 8th April we argued that the prospects of a BoJ policy shift into Q3 would support gains in USD/JPY. However, a number of more recent events have compromised that view."
"Kuroda is currently 'talking down' the chances of further monetary policy developments in the near term."
"The situation in Ukraine has taken a very clear turn for the worse and could easily deteriorate further. The conflict could easily extend through into parts of neighbouring Moldova."
"Strong US data has simply failed to lift US yields and the US$."
"On April 8th, we recommended buying USD/JPY on dips (102.40, 101.80 and 101.20). However, arguments for being long USD/JPY right now are running very thin. We would thus recommend closing that long position at the current 102.10 level."
"We still feel that domestic data will continue to fall short of BoJ forecasts and that this cannot simply be blamed on offshore developments. However, being short the yen right now makes little sense to us. We would wait for a deeper correction and clearer signs of softer Japanese data before considering selling the yen again."