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BofAML suggest that local bids for USDJPY are...>

YEN
YEN: BofAML suggest that local bids for USDJPY are potentially rising judging
from price action and lifer investment plans
- External political risks deescalate while domestic political risk on rise as
Abe suffers from popularity decline, however, BofAML believe think flow will
trump political risk this quarter.
- They believe that the overall trend of a weaker yen has to do with the end of
relentless unwinding of spec JPY shorts. However, emerging bids for foreign
assets by local investors probably explain the recent JPY weakness during Tokyo
trading hours. The trend is apparent against high yielders, namely USD, GBP, and
AUD. Some major life insurance companies have recently announced their
investment plans for FY18. While the plans differ across companies, the general
direction is increased unhedged foreign bond investments and reduced hedged
foreign bond investments, especially for USD due to high hedge costs.
- BofAML continue to expect USDJPY to gradually rise to above 110 this quarter
and potentially above 115 in H218, and remain long AUDJPY.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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