I’m just reading two notes from respected bank analysts and both are suggesting that we may be in for an extended period of improved risk sentiment which should translate into higher JPY crosses. The argument is that the new-look Washington houses will be more willing to compromise and that progress will be made on the ‘fiscal cliff’. Add to this further easy monetary policy which should erode USD value over time except against the Yen and you have a recipe for higher Yen crosses.
Sounds good in theory but lets see what the market thinks over the next few sessions. I’m short AUD/USD and USD/JPY, so basically short of AUD/JPY, which is the exact opposite of what the analysts are saying. I’m feeling much more confident already 🙂