OctaFX | OctaFX Forex Broker
Open trading account
Back

Forex Flash: Japanese government bonds have continued to sell off sharply - BBH

FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that Japanese government bonds have continued to sell off sharply.

They begin by noting that the 10-year yield jumped 11 bp to 0.86% and last Tuesday, after Japanese markets reopened from the Golden Week holidays, the 10-year yield was below 0.60%. They see that the yield now stands at its highest level since last June while reports suggest banks and funds are the main sellers. They believe that if this volatility is sustained, it risks a response by Japanese officials. The BOJ has reportedly already changed its tactics in terms of its asset purchases in line with what the dealers suggested, and this seemed to work for a little bit.

Overall, they feel that the dramatic rise in yields can has several repercussions. First, it would seem to run counter to the declared purpose of the aggressive monetary policy and, “A gradual increase in interest rates as inflation expectations increase is one thing, a 50% increase in the yield over three days is a completely different kettle of fish.” Second, they feel that while US yields have also risen recently, the backing up in Japanese rates has been even more striking and this has resulted in a sharp compression in the spread. They write, “Now around 104 bp, it is at the lower end this year's range.” Third, they note that the rise in domestic yields may deter life insurance companies and other institutional investors from aggressively implementing this year's international allocations. Fourth and finally, they feel that these considerations saw the dollar pullback to about JPY101.25 were good bids were found and additional support is seen near JPY100.80.

Forex: USD/CHF testing resistance near 0.9700 barrier

The USD/CHF has catapulted itself higher this week, breaching the 0.9700 barrier and establishing fresh highs Wednesday during European trading at 0.9717. However, this level has recently capped the advance, as the pair is now easing back towards the 0.9700 mark in these moments, checked by resistance.
Read more Previous

Forex Flash: CHF to face pressure as safe haven appeal wanes – UBS

The Swiss franc has been a major beneficiary of safe-haven flows since 2007. As UBS data below shows, investors across all major segments remain short EUR/CHF and corporates and private clients remain short USD/CHF. However, the market's big long in the franc is at risk. Yesterday the USD/CHF made new highs for 2013 above 0.9660 and the EUR/CHF is nearing this year's high around 1.2570.
Read more Next
Start livechat