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Bearish outlook unchanged for Yen – JP Morgan

FXStreet (Barcelona) - The J.P.Morgan Research Team keep their bearish outlook on the Yen intact and see a weak Yen putting pressure on the EM Asian currencies.

Key Quotes

“The dollar is on the verge of making a new five-year high this week in trade-weighted terms (basis JPMQUSD), though with considerable divergence across pairs.“

“We still think the next two to three months will prove difficult for commodity FX, notably the oil exporters.“

“Hope of Chinese lift seems insufficient to counter the downward pressure on oil prices from rising supply, unless OPEC cuts production next week.“

“We doubt they will, so are positioned for lower crude prices through a tactical short in NOK vs USD.”

“Our bearishness on the yen is unchanged despite PM Abe’s decision to dissolve the Diet this week and call fresh elections.“

“Both BoJ QQE and GPIF’s foreign asset allocation seem to be on auto-pilot, so should be able to sustain capital outflows even during a period of political uncertainty. Also, it seems quite likely Abe will return to office due to lack of visible opposition.”

“We are long USD/JPY and expect EM Asian currencies (ex CNY) to suffer near term as a result.”

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The AceTrader Research Team anticipates the USD/JPY pair to trade within the 117.36-118.12 range today as Japan’s market remains closed.
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