25 Jun 2014
JPY stubbornness persists – Rabobank
FXStreet (Edinburgh) - Jane Foley, Senior Currency Strategist at Rabobank, notes the resilience of the Japanese currency at current levels.
Key Quotes
“The market consensus continues to call for a firmer tone in USD/JPY through this year and next. This has been the case for a while”.
“Despite this expectation, USD/JPY is stubbornly positioned well below its January high. While this would imply that that the market must be disappointed by the yen’s resilience, this view may not be as pronounced at it would appear”.
“Much of the failure of USD/JPY to push higher can be explained by the persistent weakness of the USD. Against currencies such as the AUD and the NZD, the yen has lost ground this year and it is mostly flat vs. the pound. Even though the yen has climbed over 3% vs. the USD since the start of this year it is still the case that measured on a 12 mth view it currently holds the mantle of the worst performing developed world currency”.
“We have argued many times before that a stronger USD would facilitate a move higher in USD/JPY”.
“Clearly, however, a USD recovery is proving to be far more evasive than the market had expected. Despite some expectation to the contrary, the Fed last week seemed unmoved by the recent tick up in US core inflation”.
Key Quotes
“The market consensus continues to call for a firmer tone in USD/JPY through this year and next. This has been the case for a while”.
“Despite this expectation, USD/JPY is stubbornly positioned well below its January high. While this would imply that that the market must be disappointed by the yen’s resilience, this view may not be as pronounced at it would appear”.
“Much of the failure of USD/JPY to push higher can be explained by the persistent weakness of the USD. Against currencies such as the AUD and the NZD, the yen has lost ground this year and it is mostly flat vs. the pound. Even though the yen has climbed over 3% vs. the USD since the start of this year it is still the case that measured on a 12 mth view it currently holds the mantle of the worst performing developed world currency”.
“We have argued many times before that a stronger USD would facilitate a move higher in USD/JPY”.
“Clearly, however, a USD recovery is proving to be far more evasive than the market had expected. Despite some expectation to the contrary, the Fed last week seemed unmoved by the recent tick up in US core inflation”.