26 Mar 2015
USD/JPY risks a dip below 118.50/60 – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities view that broader USD weakness combined with the risk aversion tone in the markets risks a USD/JPY move below the support at 118.50/60.
Key Quotes
“Month, quarter and Japanese fiscal year-ends are looming. The old Japanese FY end repatriation canard has become significantly less of a “feature” of market chatter in recent years—because there has been little real evidence that, even if there were any repatriation flows going through the market, they had little impact on spot. In fact, through 2014, USDJPY had risen in eight of the previous ten March months.”
“And, according the Bloomberg data, March has actually been the best month of the calendar year for the pair (average spot return of +1.3%) since 2005—hardly a sign of major JPY repatriation.”
“The minor decline in spot seen so far this month appears to be the exception rather than the rule (USDJPY fell in March 2007 and again in 2008).”
“We are bullish on the broader outlook for USDJPY but the potential for a wobble in the trend higher here cannot be ignored as US yields remain below 2% and equity markets slide.”
“There is a risk of USDJPY dipping under support at 118.50/60, putting 117 on the radar, in the next few days but the move is liable to be driven by broader USD weakness and risk aversion than repatriation.”
Key Quotes
“Month, quarter and Japanese fiscal year-ends are looming. The old Japanese FY end repatriation canard has become significantly less of a “feature” of market chatter in recent years—because there has been little real evidence that, even if there were any repatriation flows going through the market, they had little impact on spot. In fact, through 2014, USDJPY had risen in eight of the previous ten March months.”
“And, according the Bloomberg data, March has actually been the best month of the calendar year for the pair (average spot return of +1.3%) since 2005—hardly a sign of major JPY repatriation.”
“The minor decline in spot seen so far this month appears to be the exception rather than the rule (USDJPY fell in March 2007 and again in 2008).”
“We are bullish on the broader outlook for USDJPY but the potential for a wobble in the trend higher here cannot be ignored as US yields remain below 2% and equity markets slide.”
“There is a risk of USDJPY dipping under support at 118.50/60, putting 117 on the radar, in the next few days but the move is liable to be driven by broader USD weakness and risk aversion than repatriation.”