USD/JPY: Unhedged Flows To Continue Providing USD/JPY With Support At Lower Levels – MUFG


What is the forecast for USD/JPY?

Here is their view, courtesy of eFXdata:

MUFG Research notes that while Japanese hedged flows will dominate, opportunistic unhedged flows will provide USD/JPY support at lower levels going forward.

“Two things in relation to Japan’s bilateral flows to the US. Firstly, flows going forward are likely to be more on a hedged basis than before the COVID crisis. Secondly, unhedged flows will be very much influenced by USD/JPY,” MUFG notes.

“Last week is probably example of Japanese investors’ sensitivity to USD/JPY levels and greater buying of UST bonds on dips in USD/JPY is likely to continue. That was seen when COVID first hit and USD/JPY plunged in early March and we suspect weekly crossborder flows next week covering this week will confirm increased foreign bond buying,” MUFG adds.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.