Forex Flash: Market may short JPY ahead of BoJ decision – UBS
FXstreet.com (Barcelona) - According to Research Analyst Chris Walker at UBS, "In the short term, we are cautious of a potential 'risk squeeze' by the EURJPY given increasing expectations that Spain may seek a formal bailout package, plus a feed through from potential policy developments inside the ECB."
"Despite todays huge surge in price, we are also concerned that the market may want to be modestly short JPY in the days ahead of the 9 Aug BOJ decision in case another round of QE is announced." he adds. On the note of Japanese Yen, the USDJPY is also rallying after some stronger than expected US payroll numbers.
Walker also states that, "our longer-term bearish EUR view has not changed however, and we therefore remain short EUR via three other structures (EURGBP put spread, EURJPY put w/ RKO, EUR digital put w/ RKO), all of which are longer term structures and are therefore not as susceptible to a shorter term risk squeeze."
"Despite todays huge surge in price, we are also concerned that the market may want to be modestly short JPY in the days ahead of the 9 Aug BOJ decision in case another round of QE is announced." he adds. On the note of Japanese Yen, the USDJPY is also rallying after some stronger than expected US payroll numbers.
Walker also states that, "our longer-term bearish EUR view has not changed however, and we therefore remain short EUR via three other structures (EURGBP put spread, EURJPY put w/ RKO, EUR digital put w/ RKO), all of which are longer term structures and are therefore not as susceptible to a shorter term risk squeeze."
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