USD/JPY: Positive bias - Westpac

Robert Rennie, Research Analyst at Westpac, explains that they have stuck with a positive bias on USD/JPY for a number of weeks now and is based on the assumption that US data momentum will build into end year, that we will see enough momentum on the budget/ tax bill to support the US$ yet further and that the Fed chair announcement adds a bit of weight to the above too.

Key Quotes

“To be sure, there remains the constant threat of US politics deteriorating and geopolitics from the likes of North Korea/ Iran capping the upside. Thus USD/JPY is at risk of stalling ahead of 114.50.”

“However, yield spreads still argue higher and while it’s debatable which way the causality goes, Nikkei strength the same. Thus we leave our upside bias unchanged for another week.”