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18 Dec 2013
Flash; No matter Dectaper or not, Yen gains to be limited - Nomura
FXstreet.com (Bali) - According to Nomura, despite any potential upside for the Yen on no-taper by the Fed, gains should be limited.
Key Quotes
"If the Fed decides to begin tapering its asset purchases this week, the difference in monetary policy between the US and Japan will be yet clearer. Importantly, we do not expect the decision to taper to hit risk sentiment so much this time. The recent market correlation between tapering expectations and risky assets is changing, because the short-end of the US curve is well anchored and tapering is now well expected."
“Linked to this, we think the market is likely to absorb the Fed’s decision without any major deterioration in risky assets. By contrast, if the Fed decides not to taper, as is our economists’ central case, it could send US yields and USD/JPY slightly lower."
"However, a dovish stance by the Fed could also support global equities, including Japanese equity. Given the recent strong correlation between USDJPY and Japanese equity prices (through the risk sentiment channel), an improvement in risk sentiment is likely to limit the downside of USDJPY."
Key Quotes
"If the Fed decides to begin tapering its asset purchases this week, the difference in monetary policy between the US and Japan will be yet clearer. Importantly, we do not expect the decision to taper to hit risk sentiment so much this time. The recent market correlation between tapering expectations and risky assets is changing, because the short-end of the US curve is well anchored and tapering is now well expected."
“Linked to this, we think the market is likely to absorb the Fed’s decision without any major deterioration in risky assets. By contrast, if the Fed decides not to taper, as is our economists’ central case, it could send US yields and USD/JPY slightly lower."
"However, a dovish stance by the Fed could also support global equities, including Japanese equity. Given the recent strong correlation between USDJPY and Japanese equity prices (through the risk sentiment channel), an improvement in risk sentiment is likely to limit the downside of USDJPY."