Deutsche Bank says go against the "Sell in May" mantra for USDJPY
Deutsche Bank says that USDJPY will be kept bid all through the year and one of the reasons if because of the GPIF.
The huge Japanese pension company increased their investment purchase boundaries last year and it's something that has slipped off of the radar for dollar bulls.
They say that the GPIF continually buying foreign investments, matched with other Japanese institutional investors jumping on the bandwagon, will amount to purchases of several trillion yen over the next 6 months, supporting USD/JPY's upward path.
As such, they say that the "sell in May" mantra should become "buy in May"
They expect USD/JPY to reach 125 by year end and 130 by the end of 2016
They've got a very valid point regarding the GPIF and it's certainly something that has slipped my mind. It's one big part of the buy side jigsaw for the pair and shouldn't be underestimated.
I also think that this summer will be very lively compared to last years snore fest. The Fed should keep us on our toes up until June and then through to September. If Greece hasn't been shoe-horned out of the Eurozone sooner they'll still be in the mix, and the UK elections should take care of a chunk of May. Volatility is what we all dream for and it's looking like we could have a sustained period of decent vol through the year. If I get good weather as well it will be a win double ;-)
DB's note comes courtesy of our mates at EFX and you can try them out yourself here
