USD/JPY: Lifers’ dip-buying flows likely to limit downside risks - Nomura

Analysts at Nomura note that on the yen, lifers’ demand for foreign bonds will remain strong, according to their investment plans.

Key Quotes

“As USD/JPY has already recovered to lifers’ end-March target range (108-112), they may wait for dips toward the 105-108 range. However, as the attractiveness of US yields increases, we expect Japanese lifers to increase their US bond investment without FX hedging.”

“A switch from hedged euro area bonds to unhedged US bond investment is possible this fiscal year. These updated investment plans suggest lifers’ dip-buying flows will likely limit downside risks for both USD/JPY and EUR/JPY.”