30 Aug 2013
Flash: USD/JPY buying a difficult proposition ahead of the weekend - RBS
FXstreet.com (Barcelona) - According to Greg Gibbs, FX Strategist at RBS, the rally in USD/JPY makes sense in line with some recovery in the worst hit EM currencies since Wednesday and some stability in global equities.
Key Quotes
"EM risk aversion has seen USD/JPY weaken in recent weeks despite a significant improvement in the USD/JPY yield advantage. We must always remember that the BoJ has by far the most aggressive QE policy. It has been months that USD/JPY has been consolidating and eventually this monetary easing is likely to start to weaken the JPY again."
"USD/JPY is trading in a narrowing wedge, and a break above that wedge is likely to drag in fresh buying. However, the risk of a Syria strike this weekend makes buying USD/JPY a difficult proposition ahead of the weekend. This may be a situation where protecting downside with a short dated option might be an appropriate strategy."
Key Quotes
"EM risk aversion has seen USD/JPY weaken in recent weeks despite a significant improvement in the USD/JPY yield advantage. We must always remember that the BoJ has by far the most aggressive QE policy. It has been months that USD/JPY has been consolidating and eventually this monetary easing is likely to start to weaken the JPY again."
"USD/JPY is trading in a narrowing wedge, and a break above that wedge is likely to drag in fresh buying. However, the risk of a Syria strike this weekend makes buying USD/JPY a difficult proposition ahead of the weekend. This may be a situation where protecting downside with a short dated option might be an appropriate strategy."