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Why MNI
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.
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Free AccessMNI US MARKETS ANALYSIS - USD/JPY Erases Election Rally
MNI US OPEN - RBNZ Cuts 50bps, OCR Forecast Slightly Higher
MNI China Daily Summary: Wednesday, November 27
J.P.Morgan: Go Long USD/JPY
Late Friday saw J.P.Morgan note that “while the risk backdrop remains far from certain for the yen (U.S. equities and Russia/Ukraine the obvious wildcards), messaging from Fed Chair Powell adds to our conviction that the impulse from higher U.S. rates on the dollar and by extension on USD/JPY has further to run - in all likelihood a lot further. It is true that correlations between yield differentials and USD/JPY have been less clean so far this year, and we would be hesitant in forecasting a trend extension of last year’s price action - as we pointed out last week, the relationship between OIS-priced Fed hikes and USD/JPY has softened after a near-linear relationship through 2021. But that should not prevent USD/JPY from making fresh highs against the backdrop of sustained upside to U.S. yields.”
- “Of course, the tactical risk to the trade remains USD/JPY’s re-discovery of its beta to risk. The challenge as we see it would be more from a Ukraine/oil-induced collapse in risk, and not so much a continued bleed in U.S. equities because of U.S. rates pushing higher. USD/JPY’s performance versus oil under risk-off regimes has not been particularly clean over the past decade or two (the beta was actually negative on average over the past decade; i.e., the yen’s performance was more a function of its safe haven credentials, less a reflection of its oil importer status). But ultimately higher oil should be bearish for the yen: there is around a 1-quarter lag in terms of the oil price impact feeding through to Japan’s trade balance, suggesting that even if the initial knee-jerk from a surge in oil and collapse in risk is USD/JPY lower, the eventual impact will be yen-negative.”
- They recommended entering a long USD/JPY position at Y115.24, with a stop at Y112.94.
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Why MNI
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.