Week In FX Asia: Forget Flows, Yen Bear Eyes ¥100
Dean Popplewell | Oct 11, 2013 09:53AM ET
Last week's portfolio flow reports out of Japan (Oct. 4th) saw one of the largest inflows on record. Japanese residents repatriated +¥2.22-trillion - driven primarily by the sale of foreign bonds. While the large one-off selling may be considered somewhat extraordinary, analysts note that looking at the four-week average, there is little evidence to suggest anything unusual. Investor flows remain consistent with rebalancing of assets following recent USD/JPY moves.
However, the USD/JPY gain over the last few days probably tells a more compelling story. It strongly suggests that the FX market does not believe the US will fall over its fiscal cliff. There seems to be enough belief being currently priced in by investors to indicate that rivaling US lawmakers will not be reckless and irresponsible when its finally comes to "crunch time." Under the present circumstances it would probably require a US default or "selective default" as defined by various rating agencies to trigger considerable Yen gains for safe-haven reasons.
The current stalemate scenario in the US would need to push the US economy towards a renewed recession before markets get to witness the Yen bull claiming the upper hand. The short-term techies expect the USD/JPY to maintain its upward momentum and continue to climb slowly towards the psychological ¥100 – being supported by the recent spate of disappointing Japanese macro data.
Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.