US Markets

BUZZ-COMMENT-JPY may be best bet into US elections given risks

Credit: REUTERS/THOMAS WHITE

The yen may be better bid into the U.S. November elections amid uncertainty over U.S. fiscal relief, the timing of a COVID-19 vaccine and weak global growth in the short to medium run. With risk sentiment set to stay fragile for now, ups and downs in global equities are also likely to figure in JPY moves.

Sept 18 (Reuters) - The yen may be better bid into the U.S. November elections amid uncertainty over U.S. fiscal relief, the timing of a COVID-19 vaccine and weak global growth in the short to medium run. With risk sentiment set to stay fragile for now, ups and downs in global equities are also likely to figure in JPY moves.

USD/JPY has broken decisively lower from a pennant formation on September 14 , and now looks poised to test the 104.20 spike low on July 31 and maybe even the 101.18 March spike low, the trough for the year. Speculative players are keen to sell on any rallies now, and could be joined by Japanese exporters and institutional investors looking to hedge receivables and offshore assets, respectively .

The Federal Reserve decision to hold policy very easy and the BOJ decision to do the same , following the change in Japan's political leadership are neutral for USD/JPY . Japanese institutional investors could continue to buy U.S. and other foreign assets on dips, but probably to a lesser degree given static interest rate differentials and with Wall Street looking toppish .

JPY crosses have recovered a bit from fresh lows Thursday but are likely to remain vulnerable given ECB concerns over EUR strength, Brexit worries for GBP and trade and diplomatic spats with China for AUD.

For more click on FXBUZ

USD/JPY: https://tmsnrt.rs/33Bky8Q

EUR/JPY: https://tmsnrt.rs/2RE3jy0

GBP/JPY: https://tmsnrt.rs/3iI6u3Q

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

((haruya.ida@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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