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Jul 08 - 09:55 AM

USD/JPY: It's Unlikely That This Move Lower A False Dawn - SocGen

By eFXdata  —  Jul 08 - 09:00 AM

Societe Generale Research discusses the ongoing move lower in USD/JPY.

"The yen is, after a period of ignoring the fall in US real yields, coming home to them with a bang. The chart shows 10yr TIPS and USD/JPY, which has been very hard to understand since mid-April. Q3 is starting on a much sounder footing. The caveat is that the fall in longer-dated US yields at the start of April saw USD/JPY fall from 111 to 107.50, before the largely unintelligible rally back to 111.60,' SocGen notes. 

"This could be a false dawn especially if TIPS yields turn higher and market volatility leaches away again. But that’s unlikely with Covid concerns, more volatile oil prices, a debate about growth peaking, and with central bank policies diverging," SocGen adds. 

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Source:
Société Générale Research/Market Commentary

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