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Morgan Stanley Research likes long USD/JPY exposure as a strategic hedge against further rise in global bond yields.
"JPY is the G10 currency most negatively exposed to increases in average global yields. This property of JPY supports our preference for USD/JPY longs, particularly given the limited room for the BoJ to deliver a hawkish surprise relative to market expectations," MS notes.
"We estimate USD/JPY fair value above 170, suggesting continued upside potential if US-Japan yield differentials widen further," MS adds.