USD/JPY: downside momentum amid risk aversion - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, expect the USD/JPY pair to trade with a downside bias between 111.00 and 114.50 next week, on the back of potential risk aversion amid political uncertainty. 

Key Quotes: 

“The calendar is relatively light for the week ahead and there are no clear-cut obvious events that could prompt market volatility in the week ahead.”

“The FOMC minutes have been classed by the market as more on the dovish side and while we would question how long that conclusion will last, there is certainly scope for it to last over the relatively short period of a week when there are no major data releases or events to alter sentiment. Fed President Kaplan (voter), Bullard (non-voter), Williams (nonvoter) and Mester (non-voter) all speak over the period through to next Thursday but the key US data will probably be the PCE inflation data released on 1st March. The payrolls will not be released as usual on the first Friday due to the shorter February and hence will not be released until 10th March.”

“Event risk appears more skewed toward risk aversion if political risks intensify in Europe again and hence yen strength is our bias for the week ahead, especially when coupled with the current momentum in the wake of the FOMC minutes.”