JPY: Lifers upgrade EUR/JPY forecast – Nomura

Analysts at Nomura note that Japan’s biggest lifers’ investment plans for H2 FY2017 show 1) weaker demand for JGBs, 2) strong demand for foreign bonds and equities, and 3) a preference for unhedged foreign bonds to hedged bonds. Their forecasts also show a less pessimistic view on EUR/JPY, while their USD/JPY forecast is on average slightly lower than six months ago, the further point out.

Key Quotes

“Major lifers’ investment plans for H2 FY2017 continue to show strong demand for foreign bonds. More positive risk sentiment should encourage them to lower their FX hedge ratio. They are likely to remain dip-buyers in the FX market, especially as their USD/JPY and EUR/JPY targets are largely unchanged from the current spot. Nonetheless, they have upgraded their view on EUR/JPY and this should support a gradual rise in EUR/JPY. We continue to recommend long EUR/JPY exposure into end-Dec 2017.”