BUZZ-COMMENT-M&A, bond issuance factors in recent USD/JPY moves

BUZZ-COMMENT-M&A, bond issuance factors in recent USD/JPY moves

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April 9 (Reuters)USD/JPY has been buffeted by the recent spate of M&A news and yen bond issuance by foreign players, accentuating break-outs in either direction and at times helping it to consolidate. The overall USD/JPY bias remains up with U.S. yields more likely to trade higher than lower but the concerted Fed campaign to emphasize its dovish message looks to be working, keeping USD/JPY heavy , .

Foreign investor flows into Japanese stocks are picking up (Ministry of Finance data , ). This is being exacerbated by in-bound M&A flows, or expectations thereof, after news of the Toshiba and Hitachi deals in progress. These flows in addition to renewed Japanese exporter sales towards 110.00 are helping to cap USD/JPY.

USD/JPY has been supported by Japanese importer dip-buys and expectations of higher U.S. yields. These flows could be accentuated by a resurgence in foreign fund gathering in the Japanese markets. Carry trades are back in vogue, and an expected spate of yen bond issuance by foreign entities could support USD/JPY even more, especially if funds raised in Japan are converted and repatriated. Berkshire’s issuance is a case in point , and more seem to be on the way. Last year saw issuance of Y195.5 bln but the year before Y430 bln. This year may top the 2019 total with Japanese rates remaining low and offshore yields moving higher.

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USD/JPY: https://tmsnrt.rs/3cZUZUL

(Haruya Ida is a Reuters market analyst. The views expressed are his own Editing by Shri Navaratnam)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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