JPY: Remain neutral - Westpac

Robert Rennie, Research Analyst at Westpac, explains that last week they jumped to a neutral view for the ¥ on the basis that price action was simply horrible and there were signs of rising risk aversion in the likes of gold and stick to the same neutral bias for the week ahead.

Key Quotes

“Clearly events in Syria, concerns about North Korea and the focus on Russia have all added to that view. US President Trumps comments on the US$ the same.”

“While we might be tempted to argue that 108.80 should be a major support level (200 day moving average and 50% retracement of 99.02 to 118.66) it’s hard to see an obvious catalyst for a sharp turnaround. Thus we remain neutral for another week.”

“Our key area of focus remains the April 26/27 “Outlook” meeting. We remain of the view that the current ¥80tn yen JGB holdings target and JGB yields around zero are inconsistent and confusing. We hope the BoJ uses the upcoming meeting as an opportunity to remove this confusion, a factor that should help to stabilise the ¥. We remain neutral until then.”