USD/JPY: Rush to JPY Hedging Unlikely; 4 Differences From The Steep Selloff In 1H16

By BofAML via eFXNews
eFXnews

Bank of America Merrill Lynch Research discusses USD/JPY outlook and argues that it’s unlikely that the pair will see a similar aggressive sell-off on a rush to JPY hedging as it did in its steep sell off into 111 around two years ago.

“There are a few key differences, however, between now and then, leaving us with our constructive medium-term outlook on USD/JPY despite the adverse price action.

1) Spot vs investment cost. 2) Foreign yield trend. 3) Price action in Tokyo. 4) Oil price trend,” BofAML argues.

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