1 Dec 2014
JPY rallies post Moody’s downgrade of Japan’s rating – Scotiabank
FXStreet (Barcelona) - Camilla Sutton CFA, CMT, Chief FX Strategist at Scotiabank, notes that JPY stabilized after rallying, having already priced in concerns over Japan that forced Moody’s to downgrade Japan to A1/ stable outlook.
Key Quotes
“JPY rallied (USDJPY dropped lower) on Moody’s decision to downgrade Japan’s debt rating to A1 (from Aa3), with a stable outlook; but has since stabilized and is entering the NA session essentially where it closed on Friday.”
“However, Japan’s credit rating remains supported by a deep domestic bond market, strong institutions and low vulnerability to external shocks with broad balance between upside and downside risks. Considering the economic, fiscal and monetary backdrop; we expect USDJPY to trend higher.”
“USDJPY short‐term technicals: mixed—like both GBP and EUR, the technical outlook for USDJPY is mixed, warning that even as spot trends higher, technicals are not warning of strong upside momentum. Support lies at Friday’s open of 117.71; while resistance lies at 119.20.”
Key Quotes
“JPY rallied (USDJPY dropped lower) on Moody’s decision to downgrade Japan’s debt rating to A1 (from Aa3), with a stable outlook; but has since stabilized and is entering the NA session essentially where it closed on Friday.”
“However, Japan’s credit rating remains supported by a deep domestic bond market, strong institutions and low vulnerability to external shocks with broad balance between upside and downside risks. Considering the economic, fiscal and monetary backdrop; we expect USDJPY to trend higher.”
“USDJPY short‐term technicals: mixed—like both GBP and EUR, the technical outlook for USDJPY is mixed, warning that even as spot trends higher, technicals are not warning of strong upside momentum. Support lies at Friday’s open of 117.71; while resistance lies at 119.20.”