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Forex pairs in this Article » USD/JPY (Barcelona) - RBS view on the Yen is that it is likely to remain range bound for the time being, however, still expects to weaken significantly in 2014.

Key Quotes

"We continued to view JPY as likely to weaken over the year ahead, but the catalyst for a higher USD/JPY may require evidence of wage growth in Japan that could help engender a clearer path for inflation."

"This may both lower real yields in Japan and increase import demand that may further weaken the trade balance. Alternatively higher US yields on return to taper-talk and better US growth may be required. Both of these drivers could still be months away."

"Following the mid-week rise in JPY on apparent concerns over policy tightening in China, we admitted a risk of a period of further strength in JPY that may be driven by further position squaring by foreign holders of short JPY positions."

"However, this was likely to trigger a weaker Japanese stock market and eventually would bring the BoJ back to enhance its policy easing, and or government rhetoric in support of USD/JPY."

"Japanese institutions would probably take this as a signal to sell JPY and any fall in USD/JPY would be relatively short-lived."
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