USD/JPY around 110 a prime sell opportunity for Japanese hedgers – Deutsche Bank

By FXStreet Taisuke Tanaka, Strategist at Deutsche Bank, notes that as expected, the Sendai G7 meeting of finance ministers and central bank governors only put together a compromise agreement on macro-policy coordination.

Key Quotes

“Member nations took the position of looking at fiscal policy in terms of their individual circumstances. We think this week’s Ise-Shima G7 summit on 26-27 May (Thu-Fri) could also adhere to this agreement, and believe its significance as a market event has declined.

Turning to the USD/JPY, while friction between Japan and the US remains, there do not appear to have been notable problems at the G7 meeting. The USD/JPY’s recovery to the over-110 made Japan less sensitive regarding “one-sided” rise in the yen.

Market interest is turning to US rate hikes again. The minutes of the April FOMC meeting last week confirmed that many members support a June rate hike, and attention was also focused on some Fed governors issuing hawkish remarks afterward. As a result, as substantial speculative USD/JPY shorts have been squeezed, we see the USD/JPY not to retrace so immediately.

However, the April FOMC statement and the Chairman’s comments were much less hawkish. Now the market interest is focused on Ms. Yellen’s remarks during her …read more

Source:: FX Street