As I’ve said many times, most of the professional traders I know are bullish USD/JPY, especially at these quite low levels, and it is hard to explain why the pair has kept falling recently despite this trader sentiment. Risk aversion can only explain so much. Now we are seeing exactly how active China has been in the JGB market and this goes a long way to explaining why USD/JPY remains so heavy. These are long term plays so don’t expect a reversal anytime soon and if China continues to buy JGBs at this rate, then USD/JPY will be trading at 75 by Christmas.