USD/JPY faces further downside – Danske Bank

Senior Analyst at Danske Bank Piet Christiansen noted the Japanese Yen is poised for further appreciation in the next months.

Key Quotes

“Portfolio flows out Japan have been an important driver behind JPY weakness in the recent year, and today’s flow data from the Ministry of Finance in Japan show that Japanese investors were net sellers of foreign bonds in the week ending 9 February and all in all, a net inflow into Japan of 630.2bn was recorded last week – the largest inflow since mid-December”.

“USD/JPY broke below 106 this morning, and we think a continued reversal of portfolio back into Japan (driven by higher interest rate volatility in the US and Europe) in combination with fiscal year-end in Japan and stretched short JPY positioning is likely to weigh further on USD/JPY in coming months”.