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Forex Flash: Massive sovereign wealth fund gobbles up JGB – UBS

FXstreet.com (Barcelona) - Market attention is now shifting to the Government Pension Investment Fund in Japan. This giant asset manager has Y111.9trn ($1.19trn). It is not a sovereign wealth fund, however its size is likely to exceed established sovereign wealth funds globally. Currently, GPIF has around 60% of its assets in Japanese government and state FILP bonds.

In contrast, less than 13% of its assets are in Japanese stock, while foreign assets account for about 23% of funds. GPIF reports into the Ministry of Health, Labor and Welfare. “But given its prominence we expect that it is likely to support the government's macroeconomic objectives by shifting more of its funds towards domestic equities and foreign assets. Such an announcement by the GPIF would induce the rest of Japan's asset management and pension fund industry to follow suit. That would be sufficient in our view to push USDJPY into a higher 100-110 range.” suggests the UBS Research Team.

Forex Flash: NZD vulnerable to downside surprises on global growth – BNZ

According to the BNZ Research Team, “Market positioning shows the NZD is particularly vulnerable to any downside surprises on global growth and risk aversion flows. Our momentum model suggests momentum accounts are long NZD, with 0.8378 being the level at which these positions will be ditched.”
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Forex: GBP/JPY falls on option trading but is held by 151.00

Today’s upside was limited to 152.23 high in both attempts Asian and London sessions. However, options trading in strengthened the Yen enough to pull the GBP/JPY to as low as 150.91, being supported by the 151.00 mark. The cross is now bouncing progressively, currently at 151.30.
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