USD/JPY: Limited upside - Westpac

Sean Callow, Research Analyst at Westpac, points out that over the weekend the US fired missiles at Syria so the Monday Sydney open was watched closely for the response of the risk barometers.

Key Quotes

“The initial move was to buy AUD/JPY, soon backed by a bounce in US equity futures.”

“This set the tone for the week, albeit some way short of exuberance. Japan PM Abe’s latest trip to Florida didn’t cause waves, though clearly Trump remains unhappy about the US’s trade deficits with Japan.”

“Our broadly bearish near term USD view implies limited upside on USD/JPY despite US bond yields creeping higher and the better risk mood.”

“But USD/JPY should at least be able to probe towards 108.00 and find support around 106.70 if no major shocks. This still leaves us neutral on the week and month.”