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The Bank of Japan is expected to leave monetary policy unchanged at the end of its meeting on Thursday.
Even with no news, many analysts think the yen is about to resume the slide that began about a year ago when the BoJ first was seen introducing its huge stimulus programme.
Morgan Stanley favours buying both the US dollar and euro versus the yen (USDJPY and EURJPY).
“We look to go long USDJPY at 97.50 with a target of 105.00, and to buy EURJPY at 133.30 with a target of 139.00,” it says in a note released on Tuesday.
But if you had to choose just one of those trades? Well, the euro has had a good run as colleagues have pointed out in recent days.
In contrast, the dollar index last week hit an eight-month trough, so arguably USDJPY will benefit more from any overall buck rebound.
But what of the yen side of the equation?
MorgStan notes that Japan’s “policy makers have repeatedly emphasised the importance of a weaker JPY as part of their reflationary efforts”, which may also include additional liquidity.
“Soft US data and the introduction of a more dovish Fed chair should keep global liquidity ample for longer, boosting risk appetite and weighing on JPY as it transitions into a funding currency,” it adds.
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