September 25, 2022 23:14 GMT
Late on Friday J.P.Morgan wrote “we maintain that conditions are not ripe yet for sustainable JPY appreciation following MoF intervention, and are therefore inclined to re-add USD/JPY length on dips.”
- “As we discussed as far back as March, maintaining YCC policy but intervening against currency weakness are incongruous. Moreover, as we have long stated, it has not been obvious that USD/JPY is dislocated from fundamentals, nor is speculative positioning extreme according to traditional positioning metrics we track.”
- “Particularly on the back of hawkish Fed developments, fundamentals still point to USD/JPY at least several yen higher from current levels. We therefore add long USD/JPY.”
- They recommend adding USD/JPY longs at Y143.10 with a stop-loss set at Y137.40.