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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