8 Jun 2015
Further gains ahead in USD/JPY – RBS
FXStreet (Barcelona) - With USD/JPY deriving support from the higher US yields, and markets ignoring Japanese fundamental data, Greg Gibbs, FX Trading Strategist at RBS, believes that the outlook for the pair remains positive for the time being.
Key Quotes
“The anchoring of expectations for a rate hike later this year, supported by the stable improvement in the labour market this year, tentative signs that wage growth may be firming and the assessment by one of the top Lieutenants at the Federal Reserve, Dudley, that rate hikes are still likely later this year has lifted 2yr swap rates in the US back to around the peak in mid-March.”
“The broader rise in bond yields, globally, over the last month, has also allowed for the moderately stronger than expected US payrolls report to have a significant influence in boosting yields in the US. We might put this down in part to firmer growth and inflation outcomes in Europe and a modest rebound in oil prices, lessening global deflation fears.”
“The rise in US yields is supporting the renewed rise in USD/JPY, despite the stronger than expected Japanese economic outcomes including GDP, wages and net exports. At this stage, the market is not seeing the improvement in Japanese data bringing forward possible BoJ QE policy tapering. However, we need to be wary that this might happen later in the year. For the time-being, the outlook remains for further gains in USD/JPY.”
Key Quotes
“The anchoring of expectations for a rate hike later this year, supported by the stable improvement in the labour market this year, tentative signs that wage growth may be firming and the assessment by one of the top Lieutenants at the Federal Reserve, Dudley, that rate hikes are still likely later this year has lifted 2yr swap rates in the US back to around the peak in mid-March.”
“The broader rise in bond yields, globally, over the last month, has also allowed for the moderately stronger than expected US payrolls report to have a significant influence in boosting yields in the US. We might put this down in part to firmer growth and inflation outcomes in Europe and a modest rebound in oil prices, lessening global deflation fears.”
“The rise in US yields is supporting the renewed rise in USD/JPY, despite the stronger than expected Japanese economic outcomes including GDP, wages and net exports. At this stage, the market is not seeing the improvement in Japanese data bringing forward possible BoJ QE policy tapering. However, we need to be wary that this might happen later in the year. For the time-being, the outlook remains for further gains in USD/JPY.”