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###POV: SANGUINE USD/JPY OPTIONS.........>

DOLLAR-YEN
DOLLAR-YEN: ###POV: SANGUINE USD/JPY OPTIONS MARKETS SIGNAL A MORE NEUTRAL
OUTLOOK
-After a choppy February and March, USD/JPY 1m risk reversals are beginning to
look more neutral, which may signal a calmer outlook for USD/JPY after a more
than 6% drop in spot this year. The measure has risen back to levels last seen
in late-January as demand for JPY strength protection dissipates. The lack of
sizeable USD/JPY options with strikes topping Y108 over the next fortnight may
further contain volatility.
-The break above the YTD downward trend line (approx. Y106) yesterday further
corroborates a more stable outlook. A close above the 50DMA (Y107.42) could also
confirm short-term support for the pair.
RISK: As yet, the Moritomo land sale scandal has had little effect outside of
the LDP's approval ratings, but a worsening outlook ahead of September elections
could dent the JPY. On the other hand, the Ichimoku GOC trading strategy still
suggests a (so far, very successful) short USD/JPY position initiated in
January.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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