Credit Agricole CIB Research likes a short PY exposure against the AUD and USD via an equally-weighted basket targeting a 4% upside with a 2% stop loss.
"Japan’s Q3 GDP recorded a disappointing contraction of -0.3% QoQ after a strong Q2 of 1.1% QoQ growth. The data has dented the narrative that the economy is on the rebound. Indeed, private demand in the economy remains weak, especially business investment. Some analysts are blaming the contraction on the weak JPY and a “sudden stop” in business spending as the cost of inputs soared because of the weak currency," CACIB notes.
"But, the BoJ’s dovish view is likely to be reinforced by today’s data rather than persuaded otherwise. Indeed, the division of labour amongst policymakers in Japan is that it is the BoJ’s job to focus on inflation and so it is maintaining its ultra-loose monetary policy as it views the rise in inflation as temporary. We are short the JPY against the AUD and USD via an equally-weighted basket.," CACIB adds.