Back
11 Jun 2013
Flash: USD/JPY still projected to touch 110.00 by year-end – UBS
FXstreet.com (Barcelona) - According to Gareth Berry, a Research Analyst at UBS, “The recent BoJ inaction does not dent our belief in further yen weakness over the next few months.”
Moreover, “We have previously argued that the reflation trade is not over yet and we stick to that view. Yen positioning is now far cleaner after last week's shakeout, and policy makers are still not out of options if circumstances call for an even more creative approach. Rising US yields are also likely to support our view. We look for the USD/JPY to reclaim the 100 level over the weeks ahead, and push onwards towards 110 by year-end.”
We would stress too that longer-term liquidity provision is still an option, despite the policy statement making no mention of it. Governor Kuroda has already expressed a desire for a flexible approach to policy implementation. Indeed, market operations at the BoJ are already conducted with a considerable degree of flexibility. Witness the variation in tenors we have already seen in liquidity operations since the advent of QQE on April 4th. In fact seven 1-year liquidity operations have already happened recently without any advance warning, in a bid to help stabilize the JGB market.
Moreover, “We have previously argued that the reflation trade is not over yet and we stick to that view. Yen positioning is now far cleaner after last week's shakeout, and policy makers are still not out of options if circumstances call for an even more creative approach. Rising US yields are also likely to support our view. We look for the USD/JPY to reclaim the 100 level over the weeks ahead, and push onwards towards 110 by year-end.”
We would stress too that longer-term liquidity provision is still an option, despite the policy statement making no mention of it. Governor Kuroda has already expressed a desire for a flexible approach to policy implementation. Indeed, market operations at the BoJ are already conducted with a considerable degree of flexibility. Witness the variation in tenors we have already seen in liquidity operations since the advent of QQE on April 4th. In fact seven 1-year liquidity operations have already happened recently without any advance warning, in a bid to help stabilize the JGB market.