22 Jan 2014
Flash: Yen shorts by Mrs. Watanabe remain small - Nomura
FXstreet.com (Bali) - JPY short positions by Mrs. Watanabe remain small, according to Yujiro Goto, FX Strategist at Nomura.
Key Quotes
"JPY short positions held by Japanese margin traders, aka Mrs. Watanabe, at major OTC brokers remained small as of end-December, according to the Financial Futures Association of Japan. Total JPY selling positions against eight currencies inched up to JPY898bn (USD8.6bn) from JPY320bn in the previous month."
"However, the amount remains much smaller than the recent peak in May (JPY2982bn). JPY short positions against USD also recovered in December to JPY485bn (USD4.6bn) from JPY86bn the previous month, but was still less than a third of the amount in October."
"Based on a smaller sample (five brokers), net USDJPY long positions keep increasing in January. As USDJPY is now trading at a level below the recent peak on 2 January, the gradual increase in USDJPY long positions by margin traders is not surprising, as they are usually contrarians. Nonetheless, USDJPY long positions are likely to stay lower than in the second half of 2013."
"We do not judge limited JPY selling activity by margin traders as a sign of diminishing expectations for further JPY weakness. In fact, our latest Individual Investor Survey suggests retail investors are more bullish on USDJPY than a month ago. After taking profits from November to mid-December amid JPY weakness, they are likely to look for better entry points to buy USDJPY."
"Because of their contrarian nature, Japanese margin traders are likely to be dip buyers of USDJPY going forward. Smaller JPY selling positions held by margin traders suggest they have more room to add JPY selling positions, and their contrarian investment style should limit downside risk for USDJPY, in our view."
Key Quotes
"JPY short positions held by Japanese margin traders, aka Mrs. Watanabe, at major OTC brokers remained small as of end-December, according to the Financial Futures Association of Japan. Total JPY selling positions against eight currencies inched up to JPY898bn (USD8.6bn) from JPY320bn in the previous month."
"However, the amount remains much smaller than the recent peak in May (JPY2982bn). JPY short positions against USD also recovered in December to JPY485bn (USD4.6bn) from JPY86bn the previous month, but was still less than a third of the amount in October."
"Based on a smaller sample (five brokers), net USDJPY long positions keep increasing in January. As USDJPY is now trading at a level below the recent peak on 2 January, the gradual increase in USDJPY long positions by margin traders is not surprising, as they are usually contrarians. Nonetheless, USDJPY long positions are likely to stay lower than in the second half of 2013."
"We do not judge limited JPY selling activity by margin traders as a sign of diminishing expectations for further JPY weakness. In fact, our latest Individual Investor Survey suggests retail investors are more bullish on USDJPY than a month ago. After taking profits from November to mid-December amid JPY weakness, they are likely to look for better entry points to buy USDJPY."
"Because of their contrarian nature, Japanese margin traders are likely to be dip buyers of USDJPY going forward. Smaller JPY selling positions held by margin traders suggest they have more room to add JPY selling positions, and their contrarian investment style should limit downside risk for USDJPY, in our view."