8 May 2014
USDJPY: Limited downside risk - Nomura
FXStreet (Bali) - Following the latest article from Nomura in which new data obtained from their clients revealed lower expectations for a stronger USD/JPY in the near term, the Bank still argues on its own analysis that downside in USD/JPY will be limited.
Key Quotes
"We believe that much lower expectations for near-term BOJ easing and smaller USDJPY long positions limit downside risk of USDJPY from the current level. Especially, the next two BOJ meetings (20-21 May and 12-13 June) are unlikely to send USDJPY lower, in our view, as expectations have already been low. Our survey‟s results boost our confidence for keeping our USDJPY no-touch option at 100 into the expiration on 4 June."
"In terms of upside risk, the GPIF reform announcement in June might be the next catalyst for JPY weakness, even though next few BOJ meetings are unlikely to be catalysts. Lower expectations for the BOJ and smaller USDJPY long positions should limit downside risk of USDJPY and we still recommend trading JPY from the short side, especially into the announcement of a growth strategy update, expected in June."
Key Quotes
"We believe that much lower expectations for near-term BOJ easing and smaller USDJPY long positions limit downside risk of USDJPY from the current level. Especially, the next two BOJ meetings (20-21 May and 12-13 June) are unlikely to send USDJPY lower, in our view, as expectations have already been low. Our survey‟s results boost our confidence for keeping our USDJPY no-touch option at 100 into the expiration on 4 June."
"In terms of upside risk, the GPIF reform announcement in June might be the next catalyst for JPY weakness, even though next few BOJ meetings are unlikely to be catalysts. Lower expectations for the BOJ and smaller USDJPY long positions should limit downside risk of USDJPY and we still recommend trading JPY from the short side, especially into the announcement of a growth strategy update, expected in June."