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Forex pairs in this Article » USD/JPY
FXstreet.com (London) - Jane Foley, Senior Currency Strategist at Rabobank explained if the ability of USD/JPY to hold above the USD/JPY103 level is not a function of USD strength, it must be related to yen weakness.

Key Quotes:

“The recent poor current account report from Japan and weak wage data will have helped support this theme”.

“Last week’s soft wage data underpins the risk that Japanese workers may be in danger of suffering real wage cuts. This clearly has negative implications for consumption and, given April’s impending consumption tax hike, brings a tangible threat to Japan’s economic recovery”.

“…there is plenty of speculation that the BoJ could increase its massive monetary policy stimulus even further. While the notion of more policy easing from the BoJ is negative factor for the yen, there is danger in this trade because the market does appear to be positioned all the same way”.

“The latest CFTC report shows that speculators were more short yen last week than at any point since July 2007. The May high at USD/JPY103.74 is likely to offer decent resistance in the near-term. A failure to break higher could spark short-covering and a step backwards for USD/JPY”.
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