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JPY shorts going down - Nomura

FXStreet (Delhi) - Yujiro Goto, Research Analyst at Nomura, notes that the JPY short positions at IMM remain small as of last Tuesday, even though BOJ easing expectations among researchers have increased from a month ago.

Key Quotes

“JPY short positions inched down to $1.4bn from $1.8bn a week before, recording the smallest net JPY short position in five weeks. Our real-time position estimates suggest JPY short positions are likely to be unwound further by Friday.”

“Surveys conducted by JCER and Bloomberg on researchers' expectations for BOJ policy showed more researchers expect the Bank to ease in October. The JCER survey conducted from 28 September to 5 October showed 46% of researchers expect the BOJ to ease in October, increasing from 34% a month ago. The Bloomberg survey (29-30 September) showed 47% of researchers expecting BOJ easing in October, while only 37% expected an easing in early September.”

“Nonetheless, JPY short positions have not increased, limiting expectations for BOJ easing among offshore FX investors at the moment. The small JPY short positions are in line with our latest client survey result, which shows only 22% expected BOJ easing this month.”

“At the same time, the client survey shows a majority of clients (59%) still expect USD/JPY to appreciate by end-December, suggesting investors likely see catalysts for USD/JPY appreciation coming from US events or global risk sentiment.”

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