The market and central banks appear to be in ‘wait-and-see’ mode ahead of the UK’s EU referendum.
The decline in USDJPY can be explained by a pushing back of expectations of Fed hikes. EURJPY’s fall reflects EU concerns.
BNP Paribas’ view is that Japanese policy easing will need to switch away from monetary policy and to fiscal policy, with a JPY 10trn fiscal package expected to be announced in the second half of the year.
Against this backdrop, we continue to favour being long XAUJPY via options which is one JPY-cross which has not fallen sharply this week – it has risen 2% over the week, while USDJPY has declined by 2% (Chart 4).
We hold a XAUJPY 3m call fly 138k/145k/152k in our portfolio.
Copyright © 2016 BNP Paribas™, eFXnews™Original Article
