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Forex Flash: Strong US data points offer potential for exciting JPY cross rallies - BMO Capital Markets

FXstreet.com (Barcelona) - Stephen Gallo, European Head of FX Strategy at BMO Capital Markets believes that extreme data points have the potential to incite the potential for some pretty exciting rallies in the JPY crosses.

Further, he wonders if the reason that US and global equity markets haven’t vaulted higher in tandem with the JPY crosses is because many of the flows into those markets (and other asset classes as well) have already occurred as expectations for the current level of USD/JPY built during the last month or so. With this in mind, he writes, “We would not be so surprised to see some mild but healthy near-term consolidation in the JPY rates as market participants await new developments. However, one major, near-term caveat is the Canadian employment data due in a short while. Given the importance of the economic data at this point, we would look for a very strong read to further widen rate spreads with Japan, especially with Japanese flows data now apparently pointing in the “correct” direction.”

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