Dollar/yen is getting comfortable around 113. What’s next?
Here is their view, courtesy of eFXnews:
Bank of America Merrill Lynch FX Strategy Research believes that the BoJ can keep the 10yr yield under control by its operations.
“On the other hand, it may tolerate the gentle rise of superlong-term (over 10yr) yields to around 1%. From BoJ’s actions after YCC was introduced, we have pointed out that the BoJ does not want to increase its superlong-term JGB purchases, or that it wants to reduce those purchases by even a small amount. At the very least, it is probably reasonable to assume that the BoJ has no intention of aggressively lowering superlong-term yields,” BofAML argues.
USD/JPY: Another leg higher in USD/JPY in 2017
“We continue to view the USD/JPY is in a medium-term bull market. We will be more concerned about currency diplomacy if the USD/JPY rallies decisively beyond 120. We would buy dips on the USD/JPY into 120, and sell the strength above the level,” BofAML advises.