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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.

Source: Forex Live