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29 Mar 2013
Forex Flash: Seasonal patterns tend to favor JPY in Mar/Apr/May period – TDS
FXstreet.com (Barcelona) - “Beyond the debate regarding whether seasonal trends exist or not, there are limits to seasonal trend analysis,” say Toronto based FX Research Team at TD Securities. “Varying the period under scrutiny can produce significantly different results,” the Team adds, “and the limited data set means that the data can provide some guidelines at best rather than hard or fast rules.”
“Repatriation has been less of a factor in recent years but that has not stopped some relatively big swings occurring around this time of year,” the analysts note. “However, though we continue to think that current USD/JPY levels are over-extended and that a good deal of still pending BoJ easing is priced in to the market at current levels, USD/JPY losses may be mitigated in the early stages of the New fiscal year if Japanese investors adjust (reduce) USD hedges for the coming fiscal year on the assumption that the JPY has further to fall – or if next week’s BoJ policy meeting manages to surprise,” TDS expands.
“We think the medium-term direction for USD/JPY remains higher but we don’t want to chase the USD up right here. Recent history suggests that the bull trend will moderate in the next few months and that the JPY may even regain a little more strength,” they conclude.
“Repatriation has been less of a factor in recent years but that has not stopped some relatively big swings occurring around this time of year,” the analysts note. “However, though we continue to think that current USD/JPY levels are over-extended and that a good deal of still pending BoJ easing is priced in to the market at current levels, USD/JPY losses may be mitigated in the early stages of the New fiscal year if Japanese investors adjust (reduce) USD hedges for the coming fiscal year on the assumption that the JPY has further to fall – or if next week’s BoJ policy meeting manages to surprise,” TDS expands.
“We think the medium-term direction for USD/JPY remains higher but we don’t want to chase the USD up right here. Recent history suggests that the bull trend will moderate in the next few months and that the JPY may even regain a little more strength,” they conclude.