USD/JPY: outlook constructive above 116.00 – Westpac

By FXStreet FXStreet (Edinburgh) – Sean Callow, Strategist at Westpac, consider the pair’s outlook as positive while above the 116.00 level.

Key Quotes

“So far this year, the negative correlation between JPY and global equity sentiment has reasserted itself, after low correlations for much of 2015. This has driven USD/JPY from above 120 to as low as 115.97”.

“Mixed comments from Japanese officials about the need for further BoJ easing have added to confusion. But ongoing sideways USD/CNY fixes should help limit Asian FX volatility short term, while CFTC data shows leveraged funds are (slightly) long JPY for the first time since Oct 2012, so a lot of JPY short-covering should be behind us”.

“We are inclined to a positive bias on USD/JPY, though might have to throw in the towel below 116.00”.
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Source:: FX Street