Deutsche Bank highlight that "realised...>

DOLLAR-YEN: Deutsche Bank highlight that "realised volatility in USD/JPY is

depressed, and technicals are in "no man's land". Despite risk-off shocks from

EM turmoil to trade war escalation, a number of factors have kept the JPY

range-bound.

- PM Abe's fortunes in the upcoming LDP leadership election appear more secure,

with his approval ratings back in safe territory.

- US equities and the VIX have been well-behaved.

- US yields have been supported by strong US data and Fed expectations.

- Equity outflows from Japan, led by pension funds and investment trusts, have

been consistent at around JPY1tn per month.

- For USD/JPY to head lower in the direction of our forecasts, we will likely

need either a US equity market correction, or a revival in BoJ tightening

expectations. The changes from the BoJ have thus far been incremental, but they

could be emboldened to push further after the LDP elections are behind us, and

with only a narrow window of opportunity before Upper House elections and the

consumption tax hike in H2 2019. Our year-end target for USD/JPY is Y108."