More on JPY from TD. 3 reasons (+1) USD/JPY has delinked from USTs, Nikkei

Author: Eamonn Sheridan | Category: News

I posted earlier on the bank's view on usyen USD/JPY and thoughts on the BOJ. 

More now on the yen:

USDJPY has curiously broken from 10yr UST yields and the NKY. This could be due to a few factors
  • First, the JPY may be enjoying a bid owing to a potential policy shift. If realized, it would de-link the JPY/10yr UST yield correlation.
  • Second, USD shorts have been concentrated against the EUR, so that the market may be rotating this exposure against the JPY.
  • Third, the backup in long-end yields may also reflect the lack of buying interest from Japanese accounts and incoming supply fears. With 10yr yields flirting with a triple-top formation near the 2.60- 2.65% zone, an area that has previously acted as a brick wall of resistance over the last 12m, political tumult could be risk-off and leave a sharp pullback.
Also ... 
  • Meanwhile, GPIF target allocations have been reached, leaving USDJPY acutely vulnerable to portfolio rebalancing or de-risking in a spike in equity vol. 
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