USD/JPY: Stick with a neutral bias for the week and month ahead - Westpac

Sean Callow, Research Analyst at Westpac, suggests that not too surprisingly, USD/JPY has proven a tough nut to crack over the past week.

Key Quotes

“The main source of fuel for the rebound looks to be global risk appetite and increased talk of bold BoJ action at the late July meeting. Officials have denied local press talk that “helicopter money” is under consideration but markets are at least likely to price in the BoJ delivering something this month. With leveraged funds last week holding their largest JPY net longs since 2011, there should be some temptation to scale back.

Still, heavy US yields short term should help keep a lid on USD/JPY rallies. Hence we stick with a neutral bias for the week and month ahead.”