JPY becomes the first ‘Post-Divergent’ currency – TDS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Delhi) – Research Team at TDS, suggests that one of the first examples of a ‘post divergent’ currency, in their view, may be the JPY.

    Key Quotes

    “We think FX markets may be approaching a key thematic inflection point. Specifically, the large-scale macroeconomic and monetary policy divergences that have driven FX in recent years may be approaching their peak. This suggests the forces that have been driving the USD uptrend in recent years may also be reaching their heights. As a result, we have become increasingly selective in terms of where we choose to pursue further USD outperformance as many of the driving factors seem to be fully priced.

    Importantly, we see this as a process rather than as a single event. The specific sequence of how the USD finds its peak will be a function of not just US dynamics, but how conditions evolve abroad.

    Indeed, we have long suspected that the 5 June high at 125.86 was an important top in USDJPY. With spot unable to move higher despite the Fed taking on a more hawkish stance, this suggests the underlying story is not as simple as it has been in the recent past.”
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