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2 Jun 2015
USD/JPY, like the USD index, is rising on little of substance - JPM
FXStreet (Guatemala) - Analysts at JP Morgan explained that like its ballistic gains earlier this year, the dollar index has surged 2.5% since mid-May, though on almost undetectable macro or policy developments.
Key Quotes:
"Thus the dollar's underlying valuation problem that undermined it two months ago has returned to tempt fate or the Fed again: since the index trades as if spreads were already 50bp wider than they are now, the Fed needs to deliver a September hike to validate the dollar's revival."
"Similarly, USD/JPY has rocketed on little related to current or expected events in Japan."
"Bond and equity flows highlight no unusual investor activity, and no area of Japanese policy appears in motion."
"This disconnect is a first for the Abenomics era, which is fine as long as the Fed is certain to hike soon but it’s unsustainable otherwise."
Key Quotes:
"Thus the dollar's underlying valuation problem that undermined it two months ago has returned to tempt fate or the Fed again: since the index trades as if spreads were already 50bp wider than they are now, the Fed needs to deliver a September hike to validate the dollar's revival."
"Similarly, USD/JPY has rocketed on little related to current or expected events in Japan."
"Bond and equity flows highlight no unusual investor activity, and no area of Japanese policy appears in motion."
"This disconnect is a first for the Abenomics era, which is fine as long as the Fed is certain to hike soon but it’s unsustainable otherwise."