27 Nov 2015
USD/JPY to stay near 121 until end of year - BTMU
FXStreet (Guatemala) - Taxahiro Sekido, Japan Strategist at Bank of Tokyo Mitsubishi explained that they expect that the widening in USD/JPY forward and basis swap rates will reach the recent record around mid-December.
Key Quotes:
"After that point and digestion of policy moves, USD/JPY forward and basis swaps will likely pull back. At the same time, USD/JPY spot rate will likely stay near 121 to the end of this year.
The USD/JPY forward discount may narrow further if Japanese investors invest domestically rather than overseas. The recent foreign direct investment has been driven by non-manufacturers, who reported quite positive business sentiment in the September Tankan survey.
Small business confidence was upgraded to 49.9 in November, near the neutral level. The JPY selling flows by SMEs may contribute to limit the USD/JPY lower bound and support the USD/JPY forward discount widening."
Key Quotes:
"After that point and digestion of policy moves, USD/JPY forward and basis swaps will likely pull back. At the same time, USD/JPY spot rate will likely stay near 121 to the end of this year.
The USD/JPY forward discount may narrow further if Japanese investors invest domestically rather than overseas. The recent foreign direct investment has been driven by non-manufacturers, who reported quite positive business sentiment in the September Tankan survey.
Small business confidence was upgraded to 49.9 in November, near the neutral level. The JPY selling flows by SMEs may contribute to limit the USD/JPY lower bound and support the USD/JPY forward discount widening."