BNP Paribas: buy USD/JPY
On Wednesday the BNP Paribas quant model (BNPP STEER) triggered a bullish USD/JPY trading signal targeting 104.32.
BNPP strategists note that the Japanese weekly portfolio flow data indicate that the trend of Japanese investors buying of foreign bonds remains in place. "Japanese investors purchased 1.33 trillion yen of foreign bonds last week, with the 4-week sum at 2.12 trillion yen. This pace is at the top of the range of the recent years and is likely to continue in our view as real yields in Japan slip further into negative territory. Outflows from Japanese investors are an important driver behind our 110 year-end forecast," analysts say.
According to the BNPP model, the rise of the US yields should correspond with a higher level for USD/JPY. 10-year US Treasury note yield hit 2.66% on June 12. This is the highest level since May 12. The US 10-year yields bounced off an 11-month low touched at the end of May.
Chart: US 10-year Treasury notes yield