From ANZ strategy for the USD/JPY
- the rise in USTs yields (10yr) is likely to slow and halt around 2.41%
- This will limit USD/JPY gains to around 115
Citing:
- BOJ's commitment to yield-curve control even in the face of other central banks becoming more neutral
- Highlights & strengthens yen's correlation to the US 10yr yield
As the Federal Reserve balance sheet starts top unwind & an ECB taper begins, volatility to increase:
- "This will drive a breakdown in the tight relationship between the yen and U.S. 10 year, and become a driver of strength for the yen"
- We are on the sidelines at the moment, awaiting slightly better levels from which to sell dollar-yen"
