Most people seem to believe in medium-term yen appreciation; I don't. Sluggish economic growth, a ginormous debt pile that is being monetized, negative yields and rising energy prices are not conducive to yen strength. And I don't buy into the idea that the BOJ is going to significantly change tack on its easing policy any time soon. Bank officials have been consistently clear in their communication and with 2018 full-year CPI on track to come in at 1%, according to consensus forecasts, there's zero reason to take the foot of the pedal.
But there's something else that might erode the enthusiasm for the yen -- its status as a haven asset has been thoroughly (and correctly) undermined recently. This week has emphasized that more than ever as U.S. equities and USD/JPY have traded in opposite directions. If the yen is going to start trading more off fundamentals at the expense of risk-on, risk-off considerations, then its long-term plight is even less rosy.
Source: Bloomberg Pro Terminal
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.