7 Apr 2015
Hold USD vs GBP and JPY – JPM
FXStreet (Barcelona) - Jan Loeys of J.P.Morgan, suggest to hold USD vs. the Pound and the Yen, with elections set to keep GBP under pressure and the a possible another round of easing in Q3 expected to keep JPY soft.
Key Quotes
“Important ones in G10 include the UK elections and the BoJ setting the stage for QQE.”
“Although UK markets have become somewhat accustomed to coalition government given the Tory/Liberal Democrat experience of the past five years, the May 7 general election may well deliver something with little precedent: a minority government, since no party may be able to secure the required 326 seats to command Parliament.”
“Separately, the BoJ launched QQE2 last Oct because inflation (ex. the April 2014 VAT increase) was falling well below its 2% target.”
“One reason policymakers have quelled their usual calls for more easing is that a weaker yen has been unpopular with consumer and small business, and local elections will be held in two rounds on April 12 and 26.”
“But when the BoJ releases its next semi-annual report on April 30 it will probably downgrade the inflation outlook, thus justifying another round of easing in Q3, even though we are unsure of the precise timing for this move and have significant concerns about the eventual limits to BoJ balance sheet expansion. Hold USD vs. GBP and JPY.”
Key Quotes
“Important ones in G10 include the UK elections and the BoJ setting the stage for QQE.”
“Although UK markets have become somewhat accustomed to coalition government given the Tory/Liberal Democrat experience of the past five years, the May 7 general election may well deliver something with little precedent: a minority government, since no party may be able to secure the required 326 seats to command Parliament.”
“Separately, the BoJ launched QQE2 last Oct because inflation (ex. the April 2014 VAT increase) was falling well below its 2% target.”
“One reason policymakers have quelled their usual calls for more easing is that a weaker yen has been unpopular with consumer and small business, and local elections will be held in two rounds on April 12 and 26.”
“But when the BoJ releases its next semi-annual report on April 30 it will probably downgrade the inflation outlook, thus justifying another round of easing in Q3, even though we are unsure of the precise timing for this move and have significant concerns about the eventual limits to BoJ balance sheet expansion. Hold USD vs. GBP and JPY.”