Back
23 May 2014
USD/JPY will eventually rise a good bit further - SocGen
FXStreet (Bali) - Kit Juckes, Head of FX Strategy at Societe Generale, remains bullish USD/JPY mid to long term, although recognizes that for the short run, his stance is neutral.
Key Quotes
"The danger is that the BOJ, by continuing to do nothing, risks reversing the positive ‘jolt’ USD/JPY received when Mr Abe first arrived. That’s why we are now tactically neutral in USD/JPY. If we reverted to the previous regime, there’s a lot more downside to come."
"USD/JPY will get support if and when the US curve starts to price in higher yields. If we get into a Fed tightening cycle while the BOJ is still in a ZIRP/QE regime, USD/JPY will rise significantly. But I’ll feel much more comfortable if USD/JPY can hold current levels."
"Finally, by looking at relative US/Japanese rates, with the pre- and post-Abenomics regimes, the good news is that in either instance USD/JPY will rise a good bit further, if you still believe that the Fed will eventually raise rates while the BOJ doesn’t."
Key Quotes
"The danger is that the BOJ, by continuing to do nothing, risks reversing the positive ‘jolt’ USD/JPY received when Mr Abe first arrived. That’s why we are now tactically neutral in USD/JPY. If we reverted to the previous regime, there’s a lot more downside to come."
"USD/JPY will get support if and when the US curve starts to price in higher yields. If we get into a Fed tightening cycle while the BOJ is still in a ZIRP/QE regime, USD/JPY will rise significantly. But I’ll feel much more comfortable if USD/JPY can hold current levels."
"Finally, by looking at relative US/Japanese rates, with the pre- and post-Abenomics regimes, the good news is that in either instance USD/JPY will rise a good bit further, if you still believe that the Fed will eventually raise rates while the BOJ doesn’t."