BNPP: USD/JPY safer for long USD exposure into FOMC meeting – eFXnews

FXStreet (Barcelona) - The eFXnews Team shares BNP Paribas’s view for the FOMC meet, with BNPP of the opinion that using USD/JPY to maintain a long USD exposure into the Fed statement is better than through EUR/USD.

Key Quotes

“BNP Paribas economics team expects the Fed to drop its “patient” language as widely expected and that the change is likely to be cushioned by commentary warning markets away from fully pricing a June rate hike and emphasizing the importance of the inflation outlook in determining when to begin tightening.”

“Markets will also focus on how the 16% gain in the broad trade-weighted USD over the past nine months is impacting Fed thinking. Our economists expect the press conference to include some discussion around USD strength.”

“A relatively dovish message from the FOMC would not be overly negative for the USD and with the Fed likely to be seen as still on track for tightening by Q3, the damage to the USD would be limited.”

“Our positioning analysis framework suggests JPY positioning remains relatively flat, making USDJPY a safer way to maintain long USD exposure compared with EURUSD.”

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