This is from a Friday note, a prescient one as it turns out:

( ICYMI: US considering limits on US portfolio flows into China … MS note from prior to this news hitting)

Morgan Stanley liking the yen due to (amongst other factors) China not entering the FTSE Russell Global Bond index. (the index is often used by Japanese investors, they are hesitant on concerns over FX hedging opportunities in CNY)

  • We are trading the JPY from the long side
  • expressing this view with short CADJPY positions and consider short EURJPY as well
  • Last week's JPY decline should be seen in the context of onshore USD shortage