18 Jul 2014
Yen selling by Mrs. Watanabe remains strong - Nomura
FXStreet (Bali) - JPY selling by margin traders remain strong, notes Nomura FX Strategists.
Key Quotes
"Japanese margin traders, aka Mrs. Watanabe, keep strong JPY short bias against USD, according to the Financial Futures Association of Japan. JPY short positions against USD held at 51 OTC brokers accelerated to JPY2658bn ($26.1bn) as of end-June, from JPY1762bn the previous month. This is the biggest USDJPY long position at least since financial crisis."
"Japanese margin traders are usually contrarians, but they accelerated JPY selling even though USDJPY has been trading in a narrow range. The latest Nomura Individual Investor Survey suggests that retail investors still expect JPY weakness to continue. Thus, margin traders are likely to add JPY selling positions against USD even though the dip in late June was shallow. Acceleration in JPY selling by Japanese margin traders supported USDJPY. High frequency data up to 11 July, albeit a smaller sample, suggests that USDJPY long positions were unwound early July."
"Total JPY short positions against the major eight currencies also recorded the biggest amount in June (JPY3440bn or $33.7bn). However, USDJPY long positions still account for nearly 80% of total JPY selling positions. JPY short positions in the margin trading market have been concentrated against the USD since the BOJ started its QQE programme in April 2013. Retail investors have been gradually increasing investment in AUD in the toshin market recently, but preference for USD remains strong in the margin trading market."
Key Quotes
"Japanese margin traders, aka Mrs. Watanabe, keep strong JPY short bias against USD, according to the Financial Futures Association of Japan. JPY short positions against USD held at 51 OTC brokers accelerated to JPY2658bn ($26.1bn) as of end-June, from JPY1762bn the previous month. This is the biggest USDJPY long position at least since financial crisis."
"Japanese margin traders are usually contrarians, but they accelerated JPY selling even though USDJPY has been trading in a narrow range. The latest Nomura Individual Investor Survey suggests that retail investors still expect JPY weakness to continue. Thus, margin traders are likely to add JPY selling positions against USD even though the dip in late June was shallow. Acceleration in JPY selling by Japanese margin traders supported USDJPY. High frequency data up to 11 July, albeit a smaller sample, suggests that USDJPY long positions were unwound early July."
"Total JPY short positions against the major eight currencies also recorded the biggest amount in June (JPY3440bn or $33.7bn). However, USDJPY long positions still account for nearly 80% of total JPY selling positions. JPY short positions in the margin trading market have been concentrated against the USD since the BOJ started its QQE programme in April 2013. Retail investors have been gradually increasing investment in AUD in the toshin market recently, but preference for USD remains strong in the margin trading market."