Dollar/yen fell to a new low below 107, hitting a low of 106.84 before bouncing. This is the lowest level since late 2016. What’s next?
Here is their view, courtesy of eFXnews:
USD/JPY: Where To Target After 108 Break?; USD/CAD: Still Looking To Buy Dips – TD
TD Research discusses USD/JPY outlook in light of its downside break of the 108 level, and thinks that a sustained break below will open significant downside potential towards 105.50/60
“Despite a reprieve in risk sentiment, USDJPY may continue to trade with a heavy tone. This leaves an asymmetric return profile for USDJPY that leans lower,†TD argues.
For USD/CAD, TD is still looking to buy on dips (see here).
“Our HFFV still sees room for USDCAD to push higher, with little pressure seen before 1.2745. This keeps us biased to expect more upside in USDCAD, leaving us firm buyers of dips. Given the room to price out some of the aggressive pricing on the BoC, we think CAD continues to lag in the G10,†TD adds.
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USD/JPY: Likely To Remain Trapped In 108-110 Range N-Term – Credit Agricole
Credit Agricole Research discusses USD/JPY outlook and expects fragile sentiment to continue to support the JPY and maintains USD/JPY in a near-term trading range of 108-110.
“While higher UST yields would be supportive of the USD, they can also weigh on equity markets and help boost the JPY.
To break this range to the downside there would likely have to be either a shift by the BoJ or a major risk-off event leading to lower UST yields and equity markets. An upside break would require abatement of the ‘sell USD campaign’ that started at the beginning of the year,†CACIB argues.
In terms of data this week, CACIB notes that Japan GDP data will be in focus for the JPY.
Our Japan economist is look for growth to slow to 0.2% QoQ (0.9% annualized) in Q417 from strong 0.6% QoQ growth in Q317, which is in line with the consensus forecast,†CACIB projects.
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