OctaFX | OctaFX Forex Broker
Open trading account

USD/JPY: looking for a decline - Scotiabank

FXStreet (Guatemala) - Eric Theoret, CFA, CMT FX Strategist at Scotiabank explained that JPY is up a modestly, strengthening for a second consecutive session with the bulk of its Asian session gains coinciding with the release of China’s better-than-feared inflation data.

Key Quotes:

"The moderation in concern about the path for China has served to further soften expectations for an acceleration of BoJ stimulus. However, central bank policy divergence is expected to remain a key driver for JPY over the medium term.

We note that USD/JPY has made a clear break with the 2Y U.S.-Japan yield spread—presenting some risk for JPY as we consider the potential for a realignment. Meanwhile, options prices suggest a growing rise in demand for protection against downside risk in USD/JPY (JPY gains), underscoring the two offsetting forces (fundamentals and sentiment) that have served to constrain movement in USD/JPY for over a month (bottom chart).

We are biased to a potential decline in USD/JPY as we consider the leading signal provided in the risk reversals ahead of the October rally in USD/JPY."

Neutral bullish above 0.7170 - UOB

Analysts at UOB are neutral/bullish so long as 0.7170 holds.
Read more Previous

Oil turns lower after short-lived spike

Crude oil prices spiked higher following a report that showed US crude inventories dropped for first time in 11 weeks, but the commodity failed to hold onto gains for long, and pulled back to negative ground for the day.
Read more Next
Start livechat