MUFG Research discusses the JPY outlook in light of the latest Japanese portfolio flow data.
"With equity purchases hedged to a much smaller degree, purchases of foreign equities can be telling. That’s probably the key development in Japanese flows at present with heavier buying of foreign equities than usual.
The MoF data for last week revealed Japanese investors bought JPY 505bn worth of foreign equities, the largest since the end of June. Over that 6-week period Japanese investors bought JPY 2,546bn – the largest total purchase over that period since 2015.
This will certainly be influential in supporting yen crosses and helps explain why despite some mixed global equity market performances and fragile risk appetite, the yen has remained weaker than many would assume," MUFG argues.