FXStreet (Edinburgh) - Jane Foley, Senior Currency Strategist at Rabobank, highlights the resilient tone around the JPY as of late.
“Over the past five sessions, the yen has been the best performing developed world currency”.
“Clearly there was a knee jerk flight to quality reaction last week after the shocking news regarding flight MH17, though a large part of this move was quickly retraced”.
“In addition to last week’s events we would attribute some of the yen’s resilient tone to the BoJ’s upbeat tone about the virtuous cycle in the Japanese economy and associated paring back of easing speculation”.
“That said attitude toward risk In New Zealand and Australia has also altered and data from the Eurozone has been soft. All this could be helping to support the yen”.
“We expect that the JPY is still on course for softening vs. the USD over the medium-term as the progression of Fed tapering highlights the extremely accommodative position of the BoJ”.
“However, near-term the readjustment in expectations regarding the outlook for the AUD, NZD and the EUR could be providing additional support for the yen”.
“Layered on top of the prevailing geopolitical risks and the adjustments to BoJ policy expectations, there would appear to be good reason to expect the JPY to maintain a firm profile near-term”.