USD/JPY: Positive bias intact – Westpac

Robert Rennie, Research Analyst at Westpac explains that they have stuck with a positive bias on USD/JPY for a number of weeks now and was based on the assumption that US data momentum will build into end year, that we will see enough momentum on the budget/ tax bill to support the US$ yet further and that the Fed chair announcement adds a bit of weight to the above too. 

Key Quotes

‘However, USD/JPY has made little in the way of gains above 114 while last week’s break above 2.40 on US 10yr yields feels like a distant memory. Thus risks of a correction appear to be rising, especially given that Japanese investor demand for foreign assets appears to have slowed.”

“We hold our views for another week though. Post the Fed chair decision, the data and activity atmospherics remain supportive for the US$.”