28 Jun 2013
Flash: Calmer markets - Societe Generale
FXstreet.com (London) - Calmer markets and a higher Japanese CPI than expected saw the yen start falling again, said Kit Jukes at Societe Generale.
He thinks this is hugely supportive of our USD/JPY 110 end-year forecast, though isn’t sure how we are supposed to trade short term. The story of 1995-2000 was that USD/JPY fell until US rates peaked, he noted, and then embarked on a long rally. He suggests that higher US rates with lower market volatility are the recipe for a rising dollar. He would like to se $/Y in a 95-100 range from now till mid-August, before the next leg of the USD/JPY rally. The risk is that instead, he say’s, we are going to take USD/JPY through 100 and re-test the highs of the move in early July
He thinks this is hugely supportive of our USD/JPY 110 end-year forecast, though isn’t sure how we are supposed to trade short term. The story of 1995-2000 was that USD/JPY fell until US rates peaked, he noted, and then embarked on a long rally. He suggests that higher US rates with lower market volatility are the recipe for a rising dollar. He would like to se $/Y in a 95-100 range from now till mid-August, before the next leg of the USD/JPY rally. The risk is that instead, he say’s, we are going to take USD/JPY through 100 and re-test the highs of the move in early July