Soaring commodity prices remain a headwind to JPY as Japan remains a large net energy importer and thus higher energy prices tend to lead to lower Japanese terms of trade. But with USDJPY testing levels well above 114.00 recently that now leads to a weaker Yen real effective exchange rate at a level not seen for six years. Citi suggests that this may tempt the BoJ to now allow Yen rates to rise to stabilize alongside US yields to support the Yen somewhat at the current levels. USDJPY manages a sub 114.00 close on Friday with resistance seen at 114.50 -80 while first support comes at 113.25 (range lows) followed by 112.25 (October pivot).
Currently (as of Oct):
• USDJPY: 6 – 12 months: 114.0
• USDJPY: Longer term: 112.0
Previously
• USDJPY: 6 – 12 months: 112.0
• USDJPY: Longer term: 112.0
MT Bias: Turning neutral JPY vs USD & Tactically bearish JPY vs USD, SGD,
AUD, NZD, CAD
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