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Long USD/JPY for next leg higher towards 130 levels – SG

FXStreet (Barcelona) - Kit Juckes of Societe Generale, sees further upside potential for USD/JPY as pressure for renewed easing is likely to build higher, anticipating a move towards 130 levels.

Key Quotes

“The Japanese trade data improved as imports fell sharply (by 14.5% y/y, while exports roise by 8.5% y/y. Return to surplus driven y collapsing imports is hardly encouraging for the economy though…..import volumes are down 0.8% in the last 3 months y/y which is less awful, though it's still soft. Export volumes are up 5% y/y.”

“The upward momentum in export values is modest, and import growth is still in a downtrend, so the underlying picture still shows how modest the effect of a huge yen depreciation has been on trade (and the economy).”

“It's going to take a long time for structural reforms to bear fruit and as the boost to exporters' profits and to inflation expectations fades, pressure for renewed monetary easing will build.”

“USD/JPY may be stuck in a range, and clearing out yen shorts may yet trigger a spike lower, but somehow, we want to get long USD/JPY for the next leg up towards 130.”

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