USDJPY set to test 105 as seasonal flows kick in - BTMU

Bloomberg reports key headlines from a research note published by the Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU), expressing their view on the USD/JPY outlook in the first quarter of 2018.

Key Quotes:

“The dollar-yen posted an average decline of 3.2 percent in the January-March period in the last four years, making it the worst quarter for the currency pair. Repatriation flows include export payments, coupons or interests from foreign investments, as well as dividends from exporters’ overseas units.”

“The first quarter, especially from February to around mid-March, is a period that typically sparks yen buying.”

“With interest-rate differentials -- which have been a key driver for currency direction -- failing to affect spot levels, investors are turning to flows.”

“Slowing purchases of overseas bonds by local investors, as the U.S. 10-year Treasury yield stays near 3 percent.”

 “With investors unsure right now of whether the U.S. 10-year yield would peak around 3 percent or not, outbound flows which usually help absorb repatriations are currently being withheld.”