JPY: Cautious neutral bias - Westpac

Robert Rennie, Research Analyst at Westpac, suggests that they would sit on a cautious neutral bias for JPY for the coming week though willing to buy dips into 108/110.

Key Quotes

“We have sat on a neutral bias for the last 3 weeks on the basis that yield support for the US$ was waning, that the ‘Russia-gate’ issue was a source of ¥ support, that JGB yields were ‘sticky’ due to lack of BoJ clarity on the APP and that Japanese investors had been heavy sellers of foreign assets.”

“To varying degrees, those factors are all still present though clearly Japanese demand for foreign assets improved on the dips in USD/JPY and ¥ crosses mid April.”

“That is not enough however to see us change our near term bias. With the Comey hearings due late next week (at the earliest) alongside the ECB meeting and UK elections, we would rather sit on a cautious neutral bias though willing to buy dips into 108/110.”