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Forex pairs in this Article » USD/JPY (New York) - According to Research Analyst Gareth Berry at UBS, “What also catches our eye is that investors continue their retreat out of Australian dollar assets – with the sovereign bid now mostly gone and Japanese investors reducing their exposure, the currency still looks vulnerable in our view - especially if iron ore prices continue to weaken.”

“We're still short the AUD/NZD as a trade recommendation and our conviction is reinforced now that Japanese investors are switching out of AUD and into NZD. With this week's RBNZ policy statement likely to contain hawkish overtones, we look for further AUD/NZD downside from here.” Berry adds.

In other news, higher JGB yields at home are starting to obstruct portfolio allocation abroad though. That's the message from the second batch of overnight data. Even lifers joined the ranks of the net sellers in May. “We still look for the USD/JPY to reclaim the 100 level and push higher thereafter, and the sooner the BoJ succeeds in exerting downward pressure on JGB yields, the sooner outflows are likely to recommence in earnest.”
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