USD/JPY: At Most Risk If UST Yield Curve Flattens Further Coming Days – Credit Agricole


There is a growing talk about the flattening of the yield curve and a potential inversion. Is a recession coming? How can it be played in the foreign exchange market?

Here is their view, courtesy of eFXdata:

Credit Agricole CIB Research discusses USD/JPY outlook, and thinks that a continuation of the UST curve flattening this week would add downside pressure on USD/JPY in the near-term/

“JPY has lagged behind EUR and especially GBP as they bounced against USD in recent days. The above may suggest that USD may be particularly vulnerable vs JPY if the UST yield curve flattens further in coming days.

In addition, we suspect that the political storm that has battered the Abe administration recently could continue to cast a shadow of doubt over the longevity of Abenomics (and BoJ’s QE) and trigger further JGB curve steepening, supporting JPY.

Moreover, we doubt that any downside surprises from the upcoming Japanese CPI data on Friday would significantly affect market’s view on the BoJ policy outlook,” CACIB argues.

For lots more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting Forex Crunch.

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

Comments are closed.