USD/JPY: Still a lot of uncertainty over Trump’s policies - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, have a neutral bias in the USD/JPY pair and they expect to trade between 104.00 and  108.00 over the next days. 

Key Quotes: 

“Yield curves around the globe have steepened in the wake of the US presidential election on market expectations of fiscal expansion. USD/JPY has picked up to the 107 level. But the USD strengthening pressure may not persist in the absence of a clear policy direction by the new administration. Sizeable fiscal expansion and corporate tax cuts for revenue repatriated to the US are still merely proposals awaiting actual approval and implementation.”

“The US-Japan short-term yield gap has remained narrow. Many big investors need more time to consider how to digest events and adjust their portfolios. Rising yield curves around the world may hurt global stock prices. Commodity prices have been calm after big initial swings. Active JPY selling and reduced forward hedging are unlikely at this stage. Though higher now, USD/JPY topside may be heavy at around 107-108 because of JPY buying.”