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Oct 01 - 01:24 PM
EUR/JPY, GBP/JPY: Shorts Remain Attractive But Some Position Covering May Be On The Cards - SocGen
First appeared on eFXplus on Oct 01 - 11:45 AM

Societe Generale Research discusses the BoJ policy outlook and maintains its bias for short EUR/JPY and short GBP/JPY exposure.

"The correlation between yen and the Japanese curve is something we are watching, but does a steeper and higher curve really undermine the currency? And is the BOJ really considering driving short rates much further below zero and causing more pain on the banking sector? In a country where the other side of the BOJ’s bloated balance sheet is a vast pile of excess reserves in the banking system," SocGen notes. 

"Maybe the market is short enough of EUR/JPY that some position-covering is to be expected, but we're having a lot of difficulty seeing how the BOJ engineers a significant currency reversal from here," SocGen adds. 

Source:
Société Générale Research/Market Commentary

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