We switched to a neutral view on USD/JPY a couple of weeks ago above 111 on the basis that the pair was looking extended, the selloff in EM, politics in Italy and Spain and trade wars all pointed towards a retest of 108, points out Robert Rennie, Research Analyst at Westpac.
Key Quotes
“Last week we noted that “we would be tempted to look at shifting back to a bullish bias on dips below 107.50″.”
“One week on, we would argue the same, but would also note the fact that, even in the depths of the ferocious sell-off in BTPs etc, USD/JPY could not even test sub 108. That arguably suggests there is more yield-related demand for USD/JPY.”
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