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31 Mar 2014
Downside risk of USDJPY remains small - Nomura
FXStreet (Bali) - According to a Nomura's Client Survey on USD/JPY, dip buying looks set to remain strong for the time being.
Key Quotes
"On 27 March, we conducted a global client survey to understand views on USDJPY, positioning, and expectations for the BOJ easing. Only 21% of clients now expect the BOJ to ease in April, suggesting the two April BOJ meetings are unlikely to send the USDJPY significantly lower."
"USDJPY long positions are also smaller than mid last year, while clients still expect USDJPY to rise gradually toward 105-110 level. Therefore, demands for dip buying will remain strong for the time being, which should also limit the downside risk of USDJPY."
"59% of investors replied that they hold USDJPY long positions, higher than our most recent, October 2013 survey (49%). However, the share of investors having USDJPY long positions remains lower than in July (68%) and in May (62%). The conviction level among investors who hold USDJPY long positions also remains lower than in July and May. The USDJPY positioning index, which is calculated by our survey results inched up
from October 2013, but it remains lower than in May and July last year."
"A majority of investors (62%) expect the USDJPY to trade between 100 and 105 as of mid-2014, while more investors see upside risks to 105-110 (34%) than downside risks to 95-100 (4%). 61% of investors expect the USDJPY to appreciate to 105-110 range by end-2014 and 19% investors target 110 or higher by end of this year. More of the distribution of the end-2014 USDJPY target is concentrating in the 105-110 range than
previous surveys."
"The most frequent reply for the expected timing of BOJ easing was May (25%), not April (total 21% for two meetings in April). Offshore investors see higher possibility of earlier BOJ easing than Japanese investors, but more offshore investors answered May is more likely than April. The most frequent reply from Japanese investors was July (28%). Only 9% of respondents answered that the BOJ will not ease again."
Key Quotes
"On 27 March, we conducted a global client survey to understand views on USDJPY, positioning, and expectations for the BOJ easing. Only 21% of clients now expect the BOJ to ease in April, suggesting the two April BOJ meetings are unlikely to send the USDJPY significantly lower."
"USDJPY long positions are also smaller than mid last year, while clients still expect USDJPY to rise gradually toward 105-110 level. Therefore, demands for dip buying will remain strong for the time being, which should also limit the downside risk of USDJPY."
"59% of investors replied that they hold USDJPY long positions, higher than our most recent, October 2013 survey (49%). However, the share of investors having USDJPY long positions remains lower than in July (68%) and in May (62%). The conviction level among investors who hold USDJPY long positions also remains lower than in July and May. The USDJPY positioning index, which is calculated by our survey results inched up
from October 2013, but it remains lower than in May and July last year."
"A majority of investors (62%) expect the USDJPY to trade between 100 and 105 as of mid-2014, while more investors see upside risks to 105-110 (34%) than downside risks to 95-100 (4%). 61% of investors expect the USDJPY to appreciate to 105-110 range by end-2014 and 19% investors target 110 or higher by end of this year. More of the distribution of the end-2014 USDJPY target is concentrating in the 105-110 range than
previous surveys."
"The most frequent reply for the expected timing of BOJ easing was May (25%), not April (total 21% for two meetings in April). Offshore investors see higher possibility of earlier BOJ easing than Japanese investors, but more offshore investors answered May is more likely than April. The most frequent reply from Japanese investors was July (28%). Only 9% of respondents answered that the BOJ will not ease again."