JPY looks to risk-appetite trends – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, noted the safe haven JPY remains at the mercy of the current risk-appetite trends.

Key Quotes

“USD/JPY climbed back above 110 this morning supported by constructive risk appetite in the Asian session”.

“We expect the Bank of Japan to maintain its monetary policy unchanged at its policy meeting ending on Thursday meaning that the BoJ will maintain its QQE and YCC with a target for the 10-year Japanese government bond yield of around 0%”.

“This should not be a source of significant price actions as this view is widely expected in the market”.

“Instead, the yen remains in the hands of investor risk appetite and not least US fixed income markets. With the prospect of the post-election risk relief rally fading soon, we see limited scope on the upside for USD/JPY from here and expect the cross to trade in the 108-112 range in the near term”.