JPY: Q2 Theme will be Further Unwinding of Yen Strength - SocGen
Kit Juckes, Research Analyst at Societe Generale, suggests that this morning’s weekly Japanese securities investment data reinforce his view that one Q2 theme will be some further unwinding of yen strength.
“Last week saw the biggest net sales of Japanese equities and bonds by foreigners (Y2.2trn) since 2008 and over the last four weeks, we have seen the biggest net buying of foreign bonds by Japanese investors since at least 2000 (Y4.7trn).
If speculative yen longs are offsetting capital outflows and keeping USD/JPY in the current range, then I know which of these two forces is likely to win out in the end. My colleague Olivier Korber thinks the range can hold but I’d like to be short yen for as much of Q2 as possible.
The current chosen vehicle is SEK/JPY, which is a pretty ‘risk-on’ trade but also one that will benefit from any further uptick in inflation in Sweden.”
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