USD/JPY: The trend is for yen appreciation – MUFG

Takahiro Sekido, Japan Strategist at MUFG Research, sees the USD/JPY pair with a bearish bias for next week, trading in the 104.50/107.50 range. 

Key Quotes:

“Investors typically turn to JPY and CHF in averting risk. JPY selling by Japanese investors buying overseas assets is likely to support USDJPY at times, but the trend is for JPY strengthening, if only at a slow pace. However USD remains firm against RMB and other emerging country currencies and some G10 currencies, including AUD, which has softened on falling resource prices and developments with China.”

“Though, USD is expected to weaken slightly, as another rate cut this year is increasingly factored in and with the 10Yr yield falling to 1.6%. We expect USDJPY to slowly decline, and it could approach the 105 level on growing risk aversion.”