JPY: Maintain a neutral view at these levels - Westpac

Robert Rennie, Research Analyst at Westpac, suggests that the shock Brexit outcome saw USD/JPY smash down through 102 (as we expected) though weakness continued through 100 (which we did not).

Key Quotes

“We had expected to see increased verbal and potentially physical intervention from the Japanese authorities in the 102/100 region.

Intervention should be a psychological turning point in this war of attrition between the market and the Japanese authorities. Declared intervention would implicitly suggest the US no longer views price action as ‘orderly’, thus putting in something of a base. That we have not seen this suggests ‘we are not there yet’.

The next key BoJ meeting is now only 4 weeks away, and Brexit risks will add to the case for action. So this does suggest that we should see some stability as we move into July. However, we maintain a neutral view at these levels given liquidity and risk concerns.”