USD/JPY: Dips below 110 well supported - Westpac

Robert Rennie, Research Analyst at Westpac explains that they have tended to view dips in USD/JPY to 110 as being well supported on the basis that the atmospherics for US data are improving which should support Fed pricing and Japanese investors have increased their appetite for foreign bonds (especially US$).

Key Quotes

“Countering the above though has been the shift towards more risk averse markets as tension on the Korean peninsula has risen. While it’s debatable whether the ¥ would be the go-to ‘safe haven’ versus the likes of gold or CHF, short term risks appear to be pointed lower on USD/JPY.”

“This increases our caution in the short term though our base case remains that risk aversion dips should be limited to the April/ June lows i.e. mid to late 108s.”