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14 Apr 2015
USD/JPY neutral near-term – Westpac
FXStreet (Edinburgh) - According to strategists at Westpac, the near-term outlook for the pair remains neutral.
Key Quotes
“With the BoJ meeting behind us, but the semi-annual outlook just ahead, FX markets will not want to give up on the prospects of more QE in Japan”.
“We doubt we will see any shifts in JGB purchases near term given some evidence of digestion issues in that market”.
“Rather, any further tweaks on QE may be on REIT/ ETFs and therefore of much less consequence”.
“We have run with a neutral bias with a view to buying dips and see no reason to step up on that view. We remain of the view that dips into the 117/119 range are a buying opportunity”.
“The model continues to play JPY from the long side, even with a negative yield signal and still poor momentum in Japan's current account signal”.
“Valuation is the key bullish signal at play, the currency having weakened much more than justified in the last year against both our long term (PPP and terms of trade) and short term (yields and volatility) valuation inputs”.
“Range trading since February has proven frustrating. Short term/medium term momentum factors are relatively neutral, keeping directional bias low”.
Key Quotes
“With the BoJ meeting behind us, but the semi-annual outlook just ahead, FX markets will not want to give up on the prospects of more QE in Japan”.
“We doubt we will see any shifts in JGB purchases near term given some evidence of digestion issues in that market”.
“Rather, any further tweaks on QE may be on REIT/ ETFs and therefore of much less consequence”.
“We have run with a neutral bias with a view to buying dips and see no reason to step up on that view. We remain of the view that dips into the 117/119 range are a buying opportunity”.
“The model continues to play JPY from the long side, even with a negative yield signal and still poor momentum in Japan's current account signal”.
“Valuation is the key bullish signal at play, the currency having weakened much more than justified in the last year against both our long term (PPP and terms of trade) and short term (yields and volatility) valuation inputs”.
“Range trading since February has proven frustrating. Short term/medium term momentum factors are relatively neutral, keeping directional bias low”.