20 Mar 2015
USD/JPY long for 125 - BNPP
FXStreet (Barcelona) - According to BNP Paribas, the case for a stronger dollar remains intact, and hence suggest maintaining a long position on USD/JPY, targeting 125 levels.
Key Quotes
“When the dust settles, we think the strong USD consensus will remain very much intact and there will be good interest to add to USD longs at current levels. The Fed remains on track to hike rates in 2015, with all but three of committee members expecting to hike by at least 50bp.”
“Moreover, the rates market is once again significantly underpricing the Fed’s 2016 and 2017 projections for the policy rate, suggesting markets have perhaps overreacted to the lowering of the other projections provided.”
“The Fed is clearly sensitive to the impact of the USD on inflation and this should help limit USD upside momentum as we approach the first Fed hike. The USD will likely trade with a greater sense of two-way risk and appreciate less rapidly than it did over the past three months.”
“Nonetheless, the underlying rationale for USD appreciation remains in place and we expect to see good interest to rebuild USD longs at these post-Fed levels in EURUSD and USDJPY.”
“We closed our long USDJPY position at 119.30 for a 1.3% gain when the pair hit our trailing stop in the aftermath of the FOMC result, but we are today re-entering a USDJPY long position at 120.50, targeting 125 with a 118.50 stop.”
Key Quotes
“When the dust settles, we think the strong USD consensus will remain very much intact and there will be good interest to add to USD longs at current levels. The Fed remains on track to hike rates in 2015, with all but three of committee members expecting to hike by at least 50bp.”
“Moreover, the rates market is once again significantly underpricing the Fed’s 2016 and 2017 projections for the policy rate, suggesting markets have perhaps overreacted to the lowering of the other projections provided.”
“The Fed is clearly sensitive to the impact of the USD on inflation and this should help limit USD upside momentum as we approach the first Fed hike. The USD will likely trade with a greater sense of two-way risk and appreciate less rapidly than it did over the past three months.”
“Nonetheless, the underlying rationale for USD appreciation remains in place and we expect to see good interest to rebuild USD longs at these post-Fed levels in EURUSD and USDJPY.”
“We closed our long USDJPY position at 119.30 for a 1.3% gain when the pair hit our trailing stop in the aftermath of the FOMC result, but we are today re-entering a USDJPY long position at 120.50, targeting 125 with a 118.50 stop.”