USD/JPY ripe for rally - RBS

By FXstreet.com | Updated July 28, 2014 AAA

FXStreet (Bali) - According to Greg Gibbs, FX Strategist at RBS, USD/JPY looks poised to trade higher from here.



Key Quotes



"It appears to us that the USD/JPY is ripe for a move up in light of the substantial rise in the USD/JPY yield advantage over the past month. As yet over this period, the USD/JPY has hardly moved."



"It may be the case that the market is waiting for higher long-term yields in the US, but theoretically long-term yields should matter much less than shorter-term yields, which embody interest rate expectations and the cost/return of FX hedging."



"The following chart compares the USD/JPY weekly since mid-2009 to one-, two-, five- and 10-year swap rate spreads; the two- and five-year spreads in particular have lifted to new multi-year highs."



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