This via the folks at eFX.
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- "We turn bearish for JPY once again, since Japan MoFs intervention made USD/JPY cheaper compared to the level what policy divergence narrative suggests. The current US terminal rate pricing is 4.6-4.7%, which is commensurate with the USD/JPY level of 146-147," MS notes.
- "Given the cheap USD/JPY valuation and the room for further policy divergence between Fed and BoJ, we see any dip for USD/JPY due to MoF intervention a good opportunity for long USD/JPY. We believe that the impact from any unilateral type intervention would be short-lived. We re-initiate a USD/JPY long position via option," MS adds.
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I'd say the buy the dip in USD/JPY is not a bad idea at all! Technical analyst folks might disagree though given that huge outside candle on intervention day. Comments welcome.
