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30 Apr 2013
Forex Flash: Re-open long USD/JPY in cash - JPMorgan
FXstreet.com (Barcelona) - JP Morgan's mid-term bearish view on the JPY remains intact, says Junya Tanase, FX strategist at the bank, noting that "recent news flow has been supportive of this case, therefore, we have reopened a USD/JPY short position."
Junya adds: "One notable development for USD/JPY is the sharp decline of the correlation between the pair and US-Japan yields spread after the unprecedented BoJ easing on April 4. USD/JPY’s beta to the move in US-Japan spread has also declined significantly, suggesting downside risks to USD/JPY would be limited even if US activity data this week surprises on the downside and/or a dovish FOMC heightens downward pressure on UST yields. Stabilization of the political situation in Italy, which should be supportive for risk markets, is also negative for the JPY."
Junya adds: "One notable development for USD/JPY is the sharp decline of the correlation between the pair and US-Japan yields spread after the unprecedented BoJ easing on April 4. USD/JPY’s beta to the move in US-Japan spread has also declined significantly, suggesting downside risks to USD/JPY would be limited even if US activity data this week surprises on the downside and/or a dovish FOMC heightens downward pressure on UST yields. Stabilization of the political situation in Italy, which should be supportive for risk markets, is also negative for the JPY."