We have run with a passive ‘buy on dips’ bias for much of the last quarter without success. Now is not the time to step up.
We see 118/120 as a very tough cap for USD/JPY near term, and with a market that remains very short the ¥, risks of correction back towards 110/112 look reasonably high.
This would be a huge buying opportunity for us. An eventual break higher in US yields as the Fed tightens more aggressively in the second half of 2017 will drive the US$ higher.
Bottom line, wait for the position based correction end Q1 as an opportunity to buy for the second half of the year.
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