Buy USD/JPY
USD/JPY has declined modestly in response and BNPP thinks that a big correction is unlikely for the following reasons: "We expect underlying Japan investor outflows to limit downside in USDJPY and for higher US front-end yields to guide the pair higher. In addition, our FX Positioning Analysis indicates that net short JPY positioning remains at very light levels – this both limits scope for a deep retrenchment in USDJPY and provides room for new positions if the market regains confidence in the USD uptrend and/or expect the BoJ to deliver further easing. In addition, the financing side of the BoP data showed more evidence of increased Japanese investor demand for overseas securities," BNPP adds.
USD/JPY has declined modestly in response and BNPP thinks that a big correction is unlikely for the following reasons: "We expect underlying Japan investor outflows to limit downside in USDJPY and for higher US front-end yields to guide the pair higher. In addition, our FX Positioning Analysis indicates that net short JPY positioning remains at very light levels – this both limits scope for a deep retrenchment in USDJPY and provides room for new positions if the market regains confidence in the USD uptrend and/or expect the BoJ to deliver further easing. In addition, the financing side of the BoP data showed more evidence of increased Japanese investor demand for overseas securities," BNPP adds.
