USDJPY remains elevated?

23 January, 2017

While there has been significant pullback in the USD/JPY, it still remains significantly above where rates and other short-term fundamentals suggest it should be. According to Credit Agricole, USD/JPY remains vulnerable given extended short positioning in the JPY.

Bank says that it remains up to President Trump and US economic data to start pushing US rates higher again to justify the level of the USD/JPY. The weaker JPY should help push Japan’s trade balance and inflation higher. Inflation data will be the main focus locally, but it is unlikely to accelerate enough to jeopardise any change in the BoJ’s current stance.

CA reminds that the JGB yield curve has been steepening in 2017 relative to the UST curve, which is weighing on the USD/JPY. So, the 


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