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The Safe Haven Currency You Forgot

Brights lights of Chuo Dori and Ginza Tokyo, Japan
Tom Bonaventure | Photographer's Choice RF | Getty Images
Brights lights of Chuo Dori and Ginza Tokyo, Japan

The circus in Europe has certainly been absorbing. But while you weren't looking, these strategists say the Japanese yen has gotten cheap.

Don't look now, but the Japanese yen is a bargain - or so say the strategists at Deutsche Bank.

"With USD/JPY moving sideways over the last few weeks, the market seems to have forgotten that it is this year’s best performing currency across both G10 and EM," they wrote in a note to clients. Sure, there have been foreign equity outflows, and foreign bond buying by the Japanese, which haven't helped the yen lately. But the strategists point out that a shrinking but still sizable current-account surplus, along with interest rates that are less and less out of line with the rest of the G4, should support the currency. Also, Deutsche Bank's research suggests there's a buildup of short positions in Japanese yen.

"We would use the cheapness in volatility as a means of re-engaging in yen longs," they say.

Over to you.

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