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”.
