7 Jun 2013
Flash: USD/JPY has a neutral bias – BTMU
FXstreet.com (Barcelona) - Bank of Tokyo Mitsubishi UFJ analysts see that USD/JPY has a neutral bias and looks set to range between 98.00 and 102.00.
They add that weak US non-farm payroll report may limit upside of USD/JPY next week albeit the widening yield gap between the U.S. and Japan on growing market expectations for tapering QE. If the NFP report is worse than the consensus, dollar selling pressure may lower USD/JPY. They see that the recent weakness in the Nikkei 225 equity index was a big concern in Tokyo. Further, the BoJ may not change its monetary policy settings next week and a likely no change in the meeting may also abet USD/JPY selling. They write, “Short term improvement in equities after the Nikkei's recent falls may encourage dollar buying. Japan's trade deficit, and real foreign direct investment will continue to support yen selling. USD/JPY upside momentum seems stronger than its downside risk.”
They add that weak US non-farm payroll report may limit upside of USD/JPY next week albeit the widening yield gap between the U.S. and Japan on growing market expectations for tapering QE. If the NFP report is worse than the consensus, dollar selling pressure may lower USD/JPY. They see that the recent weakness in the Nikkei 225 equity index was a big concern in Tokyo. Further, the BoJ may not change its monetary policy settings next week and a likely no change in the meeting may also abet USD/JPY selling. They write, “Short term improvement in equities after the Nikkei's recent falls may encourage dollar buying. Japan's trade deficit, and real foreign direct investment will continue to support yen selling. USD/JPY upside momentum seems stronger than its downside risk.”