USD/JPY: Buy on dips? - Westpac

Robert Rennie, Research Analyst at Westpac, explains that they have tended to argue that USD/JPY was a ‘buy on dips’ on the assumption that Japanese demand for foreign assets has been improving, that the Fed will raise rates in September and taper before the end of the year.

Key Quotes

“Now, the first and last of those calls look good as Japanese buying of foreign assets has picked up sharply in recent weeks and the Fed was pretty clear on its taper intentions yesterday.”

“However, the FOMC commentary around inflation being ‘more than somewhat’ below 2% has clearly shifted market pricing. We would have to tweak our view again and argue for good support below 110.”