The Yen's Easy Moves Are Over

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The easy moves are over, or so it seems. The well-lit path to EUR/JPY gains that this market has bore witness to since last September could be nearing completion. The many yen funded speculative trades that investors entered into may now be at risk. The increased chatter of PM Abe's “easy” policy rhetoric may already be hitting its political limit. While the EUR's –2% fall from grace this week on the back of a plethora of negative Euro data is beginning to convince investors that we are perhaps entering a new leg of a EUR correction rather than something more perverse.

Compounding the EUR's problems is that the regions peripheral spread tightening has probably maxed out. Even though the LRTO2 payback announcement was way less than consensus expected on Friday morning, any paying down early of the program will prevent banks from the region to want to own similar regional product. This scenario will again expose the EUR to further weakness...

Posted In: NewsForexGlobalEconomicsMarkets
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