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Morgan Stanley went short CHF/JPY at the NY...>

FOREX: Morgan Stanley went short CHF/JPY at the NY close on Thursday with a
target of JPY109.50 and a stop at JPY118.10.
- MS "think it is an attractive time to re-enter our long-term, structural
CHF/JPY short. With US yields reaching new cycle highs, the volatility in EU
assets is gradually evolving into a potential volatility event in US/global
assets, suggesting higher repatriation flow potential into the JPY vs. CHF as
Japan's foreign portfolio investments are largely in the US while Switzerland's
are mainly in the EMU. Differences in hedging activities in foreign investments
suggest JPY should outperform CHF too. This suggests that a risk-off environment
incentivizing repatriation may have a more JPY-positive impact than a CHF
positive one. CHF/JPY shorts also looks attractive from a technical perspective
as they have retraced from the top end of the trading range held since '17.
Increased concerns about Switzerland's relations with the EU could also weigh on
CHF. A key risk to this trade is that risk sentiment remains supported, keeping
JPY weak and CHF/JPY elevated."
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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