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3 Apr 2014
USDJPY longs way to go - Nomura
FXStreet (Bali) - According to Nomura FX Strategy Team, BOJ will remain a friend of JPY sellers, thus recommending to trade the USD/JPY from the long side.
Key Quotes
"USDJPY is trading higher than the level before the introduction of the QQE on 4 April 2013. Lower risk premium in the bond market and higher inflation are lowering real yield in Japan, which has been supporting a JPY weakness trend. The progress in the portfolio shift has been slow, but we are optimistic about the gradual shift by Japanese investors, which should lead to more JPY selling from domestic investors and firms."
"Even though the additional BOJ easing is not likely anytime soon, we do not expect USDJPY decline to be significant after the next BOJ meetings. At the same time, the BOJ is likely to take additional easing action, which limits downside risk of USDJPY, should downside risks to its economic and inflation forecast emerge. While USDJPY has traded strongly recently, we still recommend trading USDJPY long side."
Key Quotes
"USDJPY is trading higher than the level before the introduction of the QQE on 4 April 2013. Lower risk premium in the bond market and higher inflation are lowering real yield in Japan, which has been supporting a JPY weakness trend. The progress in the portfolio shift has been slow, but we are optimistic about the gradual shift by Japanese investors, which should lead to more JPY selling from domestic investors and firms."
"Even though the additional BOJ easing is not likely anytime soon, we do not expect USDJPY decline to be significant after the next BOJ meetings. At the same time, the BOJ is likely to take additional easing action, which limits downside risk of USDJPY, should downside risks to its economic and inflation forecast emerge. While USDJPY has traded strongly recently, we still recommend trading USDJPY long side."