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22 Jan 2015
Rebuilding USD/JPY long positions - Nomura
FXStreet (Bali) - Nomura is rebuilding USD/JPY long positions, expecting JPY weakness to reaccelerate amid BOJ easing expectations, allocating $10mn to the trade with a stop at 115.00.
Key Quotes
"We have been neutral on USD/JPY recently, as we expect a slower pace of JPY depreciation this year than in the previous two years. However, we judge the current level of USD/JPY is attractive for a renewed USD/JPY long position, as market expectations for an additional BOJ easing are likely to rise further in the near term. JPY weakness is likely to re-accelerate over the next three months. We recommend to short JPY against USD."
"We judge 1) monetary policy divergence between the US and Japan, 2) the strong portfolio shift by Japanese investors, and 3) weak external balance, as key drivers of JPY weakness, and monetary policy divergence is likely to be more significant, reaccelerating JPY weakness. The decline in oil prices should improve the Japanese external balance in the medium term, but its impact on inflation and market expectations for BOJ monetary policy will likely be more significant in the near term."
Key Quotes
"We have been neutral on USD/JPY recently, as we expect a slower pace of JPY depreciation this year than in the previous two years. However, we judge the current level of USD/JPY is attractive for a renewed USD/JPY long position, as market expectations for an additional BOJ easing are likely to rise further in the near term. JPY weakness is likely to re-accelerate over the next three months. We recommend to short JPY against USD."
"We judge 1) monetary policy divergence between the US and Japan, 2) the strong portfolio shift by Japanese investors, and 3) weak external balance, as key drivers of JPY weakness, and monetary policy divergence is likely to be more significant, reaccelerating JPY weakness. The decline in oil prices should improve the Japanese external balance in the medium term, but its impact on inflation and market expectations for BOJ monetary policy will likely be more significant in the near term."