Societe Generale FX Strategy Research argues that as USD/JPY moves are closely-correlated to 10year real yield differentials, being long EUR/JPY is more attractive as long as Bund yields are rising.
“The biggest threat to USD/JPY bulls is that 10year real yields continue to climb in Japan – a risk highlighted by the prospect of the BOJ downgrading its inflation forecast at this week’s meeting….The story is a bit different in EUR/JPY because German and Japanese inflation expectations are more closely aligned,” SocGen clarifies.
“…With solid growth prospects, while talk of ECB tapering is set to persist, that makes long EUR/JPY seem like a more attractive trade than long USD/JPY,” SocGen concludes.
Source: Societe Generale Cross Asset Research
The article is published by one of the foremost sources of Forex trading information. Link to the original article above.
from Online Forex Trading Resource
View thesource article here