USD/JPY getting expensive at 115 – Westpac

In view of Robert Rennie, Research Analyst at Westpac, USD/JPY is getting expensive at 115 and above though the strength of Nikkei/ moves in yield spreads would tend to support.

Key Quotes

“Markets were reminded this week that we should “expect the unexpected from Trump” with the shock firing of FBI director James Comey. Whether this is enough to impact the speed of policy developments remains to be seen, however it arguably should crimp demand for US$ in the near term.”

“Kuroda’s ‘admission’ that they are not hitting their ¥80tn JGB purchase pace should do the same. So we tend to see USD/JPY as getting expensive at 115 and above though the strength of Nikkei/ moves in yield spreads would tend to support.”

“We shift back to a neutral bias for USD/JPY another week and leave our 1 month target at 113. We see dips back to 110/112 as attractive.”