JPY a Buy Against CHF: Credit Agricole
- Written by: Gary Howes
Content provided by eFXnews
The continuation of poor risk sentiment should keep the Japanese Yen bid argues Manuel Oliveri, FX Strategist at Credit Agricole who writes:
At 0.45 (vs 0.23 on 30 June) our Risk index moved further into risk averse territory.
As part of last week’s publication we stressed that caution remains warranted, especially as details of the index, such as the outperformance of defensive stock market sectors, indicated more unstable conditions as indicated by the headline reading.
Looking ahead, risk sentiment is likely to remain unstable.
First of all there seems to be limited room of further rising central bank easing expectations to compensate for more muted global growth prospects and intact political uncertainty when it comes to the EU.
- Related: Why the Euro / Pound Remains a Buy: Morgan Stanley
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Hence any confirmation of further weakening global growth momentum should directly come to the detriment of investors’ appetite for risk assets.
In G10 FX the JPY is keeping the strongest safe haven appeal. Should our economists view regarding the BoJ keeping monetary policy unchanged for now prove correct, this is unlikely to change.
From that angle one should expect the JPY to continue outperforming the CHF.
The franc keeps a lower safe haven appeal on the back of the SNB’s policy mix consisting of both negative interest rates and direct FX intervention.