Robert Rennie, Research Analyst at Westpac, suggests that they have argued for some time now that the ebb and flow of risk events should be “enough to keep USD/JPY in a 110/112 over the next few weeks”.
Key Quotes
“This view has worked well of late and we would expect it to continue in coming weeks too.”
“To be sure, the fact that even in the depths of the Turkish lira crisis, we could not break below 110 suggests the downside is much less vulnerable at the moment. However, if we are correct and more US/China trade tensions are not far off, Italian debt fears rise in Sep and US mid-term fever the same, then we feel compelled to stick to the above range trade view.”
“However, we still hold out hope for higher levels over the next month or so given Fed likely to hike both Sep and Dec and recent kick up in BoJ balance sheet should be USD/JPY positive.”
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