11 Nov 2015
AUD/JPY: a bearish bias - TDS
FXStreet (Guatemala) - Analysts at TD Securities explained that they are bearish AUD/JPY via Options.
Key Quotes:
"This position serves primarily as a hedge against our more rosy risk outlook overall (especially in a risk-off event emanating from EM), as AUD/JPY tends to sell off sharply in periods of systemic risk aversion."
"That said, it also has a broader appeal. While a stabilization in China should be positive for high beta currencies like the AUD, a multi-year growth rebalancing towards services and eventual inclusion into the SDR basket should keep AUD performance biased to the downside especially with a chance of a cut by the RBA (which will depend on how fast the housing market corrects)."
"If we are correct in assuming that the end of the USD rally is nigh, then we may have already seen the peak in USD/JPY."
"Pension reallocation is largely complete and the BoJ has also signaled little appetite to renew unorthodox policy measures. JPY weakness is a positive for exports, but corporates have used this for balance sheet repair while seeing little followthrough on wages, which is problematic for domestic demand."
Key Quotes:
"This position serves primarily as a hedge against our more rosy risk outlook overall (especially in a risk-off event emanating from EM), as AUD/JPY tends to sell off sharply in periods of systemic risk aversion."
"That said, it also has a broader appeal. While a stabilization in China should be positive for high beta currencies like the AUD, a multi-year growth rebalancing towards services and eventual inclusion into the SDR basket should keep AUD performance biased to the downside especially with a chance of a cut by the RBA (which will depend on how fast the housing market corrects)."
"If we are correct in assuming that the end of the USD rally is nigh, then we may have already seen the peak in USD/JPY."
"Pension reallocation is largely complete and the BoJ has also signaled little appetite to renew unorthodox policy measures. JPY weakness is a positive for exports, but corporates have used this for balance sheet repair while seeing little followthrough on wages, which is problematic for domestic demand."