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Aug 17 - 09:55 AM

USD/JPY: Risk-Reward Attractive For Short USD/JPY - Citi

By eFXdata  —  Aug 17 - 08:30 AM

Citi flags a scope for downside pressure on USD/JPY over the coming weeks.

"Yields pushed higher last week in line with expectations. However, CitiFX Strategy continues to view this as a tactical move and have turned neutral on rate expectations. We expect the trend in deeper negative real yields will soon resume as inflation expectations remain elevated while nominal yields remain range bound," Citi notes.

"This suggests risk/reward is attractive for short USDJPY given the currency pair’s close relationship to yields. This could be further supported by a potential shift in exporter hedging targets," Citi adds. 

Source:
Citi Research/Market Commentary

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