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USD/JPY: mixed outlook before FOMC - Scotiabank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 15, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Guatemala) - Eric Theoret, CFA, CMT FX Strategist at Scotiabank explained that the broader market tone remains a primary risk for JPY, as we consider its ongoing vulnerability to haven-driven gains in periods of turmoil.

    Key Quotes:

    "Options prices are showing signs of stabilization, suggesting a potential limit to the recent turn in demand for protection against JPY gains (USD/JPY decline)."

    "JPY appears vulnerable to a turn as we consider the recent divergence from fundamentals and the U.S.-Japan 2Y yield spread that currently implies a USD/JPY level around 125.00. As such, we maintain a focus on downside risk in USD/JPY but highlight the potential for swift gains in the event of a stabilization in the broader tone. Domestic risk is limited ahead of the BoJ later this week. "
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