FXstreet.com (Barcelona) - USDJPY remains a buy on dips with the pair still likely to hit 85 in the next few weeks, according to Mansoor Mohi-uddin, Head of FX Strategy at UBS.
Japan's trade balance for February did record a modest surplus for the first time in five months at Y32.9bn, on the back of stronger than expected exports to the US, "but Japan's recent run of monthly trade deficits isn't the main reason to be bearish on the yen" Mansoor notes.
"Instead the Bank of Japan's monetary loosening announced last month plus higher yields in the US are the factors that suggest the currency will weaken further against the dollar" the analyst adds.
Last week, BoJ Governor Shirakawa repeated his promise that the central bank - having adopted a 1% CPI inflation goal at February's meeting - would keep pursuing steps to beat deflation, says the analyst, concluding that "further easing this year should not be ruled out by the BoJ."
Japan's trade balance for February did record a modest surplus for the first time in five months at Y32.9bn, on the back of stronger than expected exports to the US, "but Japan's recent run of monthly trade deficits isn't the main reason to be bearish on the yen" Mansoor notes.
"Instead the Bank of Japan's monetary loosening announced last month plus higher yields in the US are the factors that suggest the currency will weaken further against the dollar" the analyst adds.
Last week, BoJ Governor Shirakawa repeated his promise that the central bank - having adopted a 1% CPI inflation goal at February's meeting - would keep pursuing steps to beat deflation, says the analyst, concluding that "further easing this year should not be ruled out by the BoJ."
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
Read more: http://community.nasdaq.com/News/2012-03/forex-flash-usdjpy-still-on-course-to-hit-8500-ubs.aspx?storyid=129539#ixzz1qAxiysBc
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