Forex Flash: China and Germany climb as Japan and France wobble – Societe Generale
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USD/JPY
FXstreet.com (Barcelona) - Sebastien Galy, Senior FX Strategist at Societe Generale notes that as China and Germany continue their recovery, France and Japan continue to drift down a different path.
The deterioration of Japan's trade balance, linked in part to tension with China, were enough to boost USDJPY higher on a deterioration of Japan's net savings position, supported by further comments from policy makers. Galy adds that the JGB curve does not price in a 2% inflation target as it is JPY moving away from an unstably high equilibrium, driven by a deterioration in its net savings, policy jaw boning and a helpful market. Nonetheless, the back end of the JGB is moving gently higher, while a 20 year auction was weaker than expected.
The deterioration of Japan's trade balance, linked in part to tension with China, were enough to boost USDJPY higher on a deterioration of Japan's net savings position, supported by further comments from policy makers. Galy adds that the JGB curve does not price in a 2% inflation target as it is JPY moving away from an unstably high equilibrium, driven by a deterioration in its net savings, policy jaw boning and a helpful market. Nonetheless, the back end of the JGB is moving gently higher, while a 20 year auction was weaker than expected.
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