USD/JPY: To go back to the 138/140 area – ING

USD/JPY can hang around this 145/148 area. It’s doubtful it sustains a move over 150 and, ING’s FX strategist Chris Turner notes.

USD can hang around this 145/148 area

“Also very much in focus is the size of the yen carry trade and whether a further unwind needs to drive USD/JPY sub 140 and spark more cross-market volatility. We expressed our views on this issue last Friday.”

“We suspect that the top layer of carry – speculators in yen futures markets – may be close to flat in their positions now. As to the deeper layer of the yen carry, we think it is very hard to tell. We would take any definitive declarations of the yen carry trade being 50% or 75% unwound with a pinch of salt.”

“For the time being, however, it looks as though USD/JPY can hang around this 145/148 area. Over the next couple of months, we doubt it sustains a move over 150 and would expect the softer US rate environment to bring it back to the 138/140 area.”