USD/JPY - We remain a buyer on dips – Westpac
“We remain a buyer of dips, but would now shift the buy level up to 111/113”, says ForeX focus note from Westpac Institutional Bank.
Key points
We have been arguing for some time for a 110/112 test as an opportunity. While it’s hard to argue that we had much opportunity to buy sub 112, it does feel as if that strategy has now moved on.
Speculative long positions have clearly been culled in recent weeks if CFTC positioning is a guide. The lack of aggressive sell off towards the 110 level suggests less room for the downside we had hoped for.
Event risk
A reasonable run of data this next week in Japan with Jan trade data Monday, flash PMI Tuesday and the Cabinet Office monthly Thursday. Expecting to see seasonal softening in Jan exports, but this update will mark the 5th consecutive trade surplus in Japan, a clear sign the current account recovery is well under way.