USD/JPY to grind lower - MUFG
The trade of the week from Mitsubishi is a fall in USD/JPY to 105.00
MUFG Research discusses the USD outlook and sees a scope for USD/JPY to move lower in the near-term. MUFG is short USD/JPY* as its ToTW this week targeting a move towards 105.
"The volatile nature of US dollar performance in recent months has made it even more challenging to forecast performance. There is scope for the current stage of US dollar weakness to extend further in the near-term although we would caution that one should not be complacent in believing the policy measures taken to date will result in a further retracement of USD strength," MUFG notes.
"While we certainly do not believe we are necessarily through the
worst of this crisis and see high risks of a renewed global equity
market sell-off after the sharp gains recorded this week, we do suspect
that the actions from the Federal Reserve will mute the scale of USD
demand that would accompany any renewed risk sell-off. ..With
the Fed having addressed USD liquidity issues, we see the path opening
up for USD/JPY to grind back lower over the coming weeks," MUFG adds.