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CIBC Recommend Short USD/JPY Position

JPY

CIBC issue new trade idea: Short USD/JPY

  • They enter at market, with a target of 116.30 and a stop loss at 125.50.
  • CIBC see the pair as incredibly overbought. Anytime that we have seen USD/JPY exit overbought levels in the past has generally corresponded to at least a 1.5% move lower.
  • The current level of 10-year spreads is still above where it should be according to a simple regression against the currency pair. Put simply, USD/JPY has overshot when compared to one of its most important drivers over the past few years.
  • Japan is among the world’s largest energy importers and because of this, there’s often a strong correlation between USD/JPY and crude prices.
  • The biggest risk to this view is that commodity prices continue to rally in the near-term and dollar demand remains firm amongst Japanese importers.
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