The yen’s rise is more fragile than the euro’s

The Japanese yen and euro have both chalked up impressive year-to-date gains of around 12% against the US dollar, Bank of America argues that the yen’s rise is more flimsy.

BofA notes:

• The yen’s rally has been disproportionately driven by speculative positioning
• The euro’s rise has been more persistent than JPY’s across daily market regimes
• German fiscal expansion is a unique euro driver
• Structural outflows from Japan have fallen off the market radar

They note that a currency deal between the US and Japan is a tail risk but that’s something that Kato downplayed earlier today.

This article was written by Adam Button at www.forexlive.com.