USD/JPY: Neutral view for another week - Westpac

Robert Rennie, Research Analyst at Westpac, explains that they have remained on a neutral bias for the last 6 weeks for USD/JPY on the basis of waning yield support for the US$; rising JGB yields not helped by BoJ exit strategy chatter/ lack of clarity on BoJ APP and the ongoing ‘Russia-gate’ issues.

Key Quotes

“Despite the improved price action, we are not overly convinced by the move. Indeed, I like dollar move as “a low intensity grind”.”

“Indeed, with yield spreads moving against the US$, it feels as if the move towards 111.80/ 112 this week is overdone.”

“We hold the neutral view for another week, but dips back towards 110 would see us flip to a buy.”