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Forex Flash: Japanese life insurers set to release fiscal year outlooks - BBH

FXstreet.com (Barcelona) - Brown brothers Harriman analysts note that Daido Life, one of the smaller of the Big 9 life insurance firms in Japan that dominate the industry, released its outlook for the fiscal year.

They add that others will do so over the next week or two. According to press reports, they note that Daido Life said that it will slow the pace of its JGB purchases, which appears at least partly forced upon it by the BOJ intent to buy 70% of the new supply. It expects the 10- yield to trade in a range of 0.3%-0.7%. They feel that it implies that when yields approach the upper end of the range, it will likely be a better buyer of JGBs. Currently the yield is just below 0.6% and when the yield is at the lower end of the range, it will likely be a better buyer of foreign bonds. Further, they add that it indicated that it will buy more foreign bonds this year than last, but did not say how much more. They write, “In the last fiscal year it bought JPY120 bln. In most of the discussions of Japanese purchasing of foreign bonds, little attention is paid to the fact that the currency exposure is often hedged. Daido Life said that it would keep it currency hedge ratio steady near 70%.” They explain that means that the demand for foreign bonds is not the same as demand for the foreign currency and it expects the dollar to trade between JPY90 and JPY120 this year and the euro to trade between JPY105-JPY145. They finish by noting that currently, the dollar is near JPY98 and the euro is near JPY128.80.

Forex Flash: Instability rises - Societe Generale

Sebastien Galy, Senior FX Strategist at Societe Generale notes that it took only some speculation of a German downgrade to send the DAX plunging sharply lower, before it partially recovered.
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Forex Flash: Impact of the BoJ decision on other currencies and central banks – JP Morgan

JP Morgan analysts observe the effect the Yen weakness is having on many currencies, as they rise sharply, and believe the policy response will vary by country but will not add up to global monetary conflict. “Amongst the major economies, no central bank is likely to intervene; most of them consider unilateral intervention feckless. We note Switzerland is the exception, but Japanese investors are not aiming for its low-yield assets, so BoJ policy isn’t relevant to the franc”, wrote analyst Jan Loeys, adding that several countries have shown a willingness to defer rate hikes (RBNZ, RBA, Riksbank) or cut rates (Norges Bank) to offset currency strength, since officials implicitly target overall monetary conditions. “Only the money market curves in New Zealand and Sweden price in rates hikes over the next year, so dovishness from those central banks should limit the upside on NZD and SEK and even leave them vulnerable to a short-term correction lower”, he continued, expecting intervention from Taiwan and Korea in EM countries. JP Morgan analysts continued their observation, pointing to more intervention in Brazil, Colombia, and Peru even before the BoJ announcement, and Chile has increased its verbal intervention as USD/CLP trades under 470, while Banxico hands-off approach should stand as well as the BoC.
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