EUR/JPY: Correction An Opportunity To Buy - SocGen

EUR/JPY: Correction An Opportunity To Buy - SocGen

5 June 2017, 21:35
Roman Vashchilin
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Societe Generale FX Strategy Research notes that following the US May jobs report, the Fed is likely observing the decent gains in employment, and the modest wage growth, which support a June rate hike, but don’t point them in the direction of any longer-term sense of urgency.

"The desire to get inflation back to its 2% target (for the PCE deflator) outweighs any sense that they need to get rates to the FOMC’s projected long-term ‘dot’ at 3%.  

A slow-moving fed is not a recipe for a stronger dollar, but it’s not particularly a convincing recipe for much lower US bond yields or for a risk-averse, stronger yen either. It looks more like a recipe for yield-hunting to return," SocGen adds. 

"On that basis, the correction in EUR/JPY over the last few days is an opportunity to buy as USD/JPY finds support at its 200-day moving average," SocGen argues.

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