Goldman Looks At Mrs Watanabe Flow

Goldman Sachs have noted that "forex trades by Japanese retail investors - typically known as Mrs. Watanabe - cannot be overlooked as they often surpass overseas investments by institutional investors in size. Japanese retail investors prefer currencies with higher interest rates, much the same as investors in the CME forex futures market. But, despite the USD/JPY interest rate differential approaching zero in 2020, retail investors marked Y1.3 trillion in net purchases of the US dollar in July, on par with investments by institutional investors. This was partly because the US dollar depreciated in July. Japanese retail investors tend to be strongly contrarian, buying the US dollar when it is depreciating (i.e. they function as a price stabilizer). This stands in contrast to the CME futures market where investors buy the US dollar when it is appreciating."