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Nov 29 - 10:55 AM

JPY: Re-Attaching To risk But Main Driver Of USD/JPY Still UST Yields - Credit Agricole

By eFXdata  —  Nov 29 - 09:30 AM

Credit Agricole CIB Research discusses the JPY outlook and sees a scope for USD/JPY to regain some grounds in the near-term.

"It has been a volatile few days for the JPY, with the currency surging on the back China stumbling in its implementation of its 20-point plan to ease Covid restrictions. Newswire headlines recently have been reporting of a demand for safe havens and therefore the JPY as well as the USD. We think positioning was more at work than the JPY actually re-coupling with risk sentiment and becoming the go-to safe haven of investors," CACIB notes. 

"Indeed, the main drivers of USD/JPY are still UST yields as well as the slope of the UST curve, according to our FAST FX model. The model also points to USD/JPY remaining strongly negatively correlated with global equity markets. So higher UST yields on the back of a hawkish Fed would still see USD/JPY head higher and not be dragged lower by weaker global equity markets," CACIB adds. 

Crédit Agricole Research/Market Commentary


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