Free Trial

ANZ recommend selling USD/JPY at.........>

DOLLAR-YEN: ANZ recommend selling USD/JPY at 110.96 with a stop at Y112.50 and
an initial target of Y107.00.
- ANZ point to "increased risk that USD/JPY weakens from here, as long USD
(short JPY) positions neutralise. While 3-months implied vol. in USD/JPY has
risen somewhat since last week, we think it looks too low, given the risks over
the next weeks. Importantly, valuation consideration suggests heightened risk of
a reversal in USD/JPY. Our fair value model shows that USD/JPY should be much
lower and its over-valuation has reached extremely stretched levels. Finally,
geopolitics is still a focus for markets, & plenty of catalysts this week could
re-ignite concerns (not least the Manafort Trial starting on the 25th). Our
model of Japanese flow suggests risk is a key factor in explaining shifts in net
flows, the higher the uncertainty the lower the net outflows. Even from a
domestic point of view, reports that the Bank of Japan may tweak its current
policy settings at its 31 July meeting - in a way that would lead to a de facto
tightening in monetary policy - also may help drive USD/JPY lower."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.