19 Jul 2013
Flash: USD/JPY likely to establishing a steady rising trend - RBS
FXstreet.com (Barcelona) - According to Greg Gibbs, FX Trading Strategist at RBS, the USD/JPY uptrend has further upside to go, with both technicals and fundamentals aligning.
Key Quotes
"Notwithstanding the sizeable fall in USD/JPY in May/June, it has still essentially retained a rising trend. The low in June, crucially, was above the level prevailing before Kuroda’s BoJ implemented his historic QQE on 4-April. Without trying to be too scientific the pace of gains in USD/JPY since January is consistent with the more aggressive QE policy of Japan."
"The Japanese economy is responding significantly to Abenomics and his three arrows, the strongest arguably being the QE policy,the most challenging is economic reform."
"The LDP is expected to gain control of the upper-house in elections on the weekend. This should bolster confidence in its ability to pass reforms. A good showing in the election may be viewed as an endorsement of Abenomics. The weaker JPY is a result of the BoJ’s QE policy and the government’s role in supporting more aggressive BoJ action. As such, a strong election result will tend to provide more political support for BoJ QE."
"We are in that phase of the moon where good US economic data is good for the USD/JPY since it will reinforce the Fed taper, and stronger Japanese data will also boost the USD/JPY since it reinforces confidence that the BoJ and Abe are on the right path."
News that Japanese household demand for lending has reached a high since 2008 in the BoJ Loan Officers Survey, and housing
starts rising sharply in recent months, suggests that households see price inflation in the property sector and are encouraged to buy with real yields low in Japan. This is evidence of BoJ policy working, so it should persist with a policy that will keep JPY.
Key Quotes
"Notwithstanding the sizeable fall in USD/JPY in May/June, it has still essentially retained a rising trend. The low in June, crucially, was above the level prevailing before Kuroda’s BoJ implemented his historic QQE on 4-April. Without trying to be too scientific the pace of gains in USD/JPY since January is consistent with the more aggressive QE policy of Japan."
"The Japanese economy is responding significantly to Abenomics and his three arrows, the strongest arguably being the QE policy,the most challenging is economic reform."
"The LDP is expected to gain control of the upper-house in elections on the weekend. This should bolster confidence in its ability to pass reforms. A good showing in the election may be viewed as an endorsement of Abenomics. The weaker JPY is a result of the BoJ’s QE policy and the government’s role in supporting more aggressive BoJ action. As such, a strong election result will tend to provide more political support for BoJ QE."
"We are in that phase of the moon where good US economic data is good for the USD/JPY since it will reinforce the Fed taper, and stronger Japanese data will also boost the USD/JPY since it reinforces confidence that the BoJ and Abe are on the right path."
News that Japanese household demand for lending has reached a high since 2008 in the BoJ Loan Officers Survey, and housing
starts rising sharply in recent months, suggests that households see price inflation in the property sector and are encouraged to buy with real yields low in Japan. This is evidence of BoJ policy working, so it should persist with a policy that will keep JPY.