JPY/CNH: Looking for the 6.70 handle to turn short in the cross – ANZ

Barring a return of extreme risk aversion as seen in early March when JPY/CNH traded above 6.80, economists at ANZ Bank expect the cross to trade lower from the current level.

Key quotes

“With a fiscal aid package of more than 20% of GDP, the BoJ has now offered to buy an unlimited amount of government bonds. Ultra easy monetary policy will keep JPY weak. In comparison, the PBoC will ease but there is no plan to monetize the budget deficit.” 

“We look for a rebound to the 6.7 handle to start turning short in the cross. Forward points are positive (about 150pips per month), to the benefit of sellers.” 

“For buyers, the immediate support is 6.60, held well in the past month.”