MUFG Research discusses discusses USD/JPY and maintains a bullish bias expressing this view via holding exposure in spot targeting a move towards 112.50.
"We continue to rum a long USD/JPY view. USD/JPY remains the standout currency pair as being most influenced by the 10-year UST bond yield - and we do not see that changing," MUFG notes.
"However, we must also caveat this view as being short-term. Valuation remains stretched at these levels which will limit the upside scope and hence a 2-3 big figure upside potential for USD/JPY might be all we should expect...Take advantage of the possible further move higher in UST bond yields by running long USD/JPY positions. However, be nimble as the scope for yen depreciation based on current valuation metrics, will be limited in scale," MUFG adds.