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BoJ tone and carry trades outlook
The latest rhetoric out of the BoJ, particularly around their cautious stance on further tightening, has me reconsidering some of the carry trade positioning I've been watching. While the yen remains fundamentally weak, that pause is giving a bit of a breathing room to currencies like ZAR. I've been watching $ZARJPY closely and it's been a bit of a wild ride today, touching 9.981 on the high before pulling back to 9.905. The question for me is whether this BoJ nuance is enough to tempt a broader unwind in the short-term, or if the carry-hungry market will just reload on any dips. Not seeing any major reason to jump out of higher yielding pairs yet, but definitely keeping a tighter stop on anything linked to JPY strength scenarios.
1 comments · 1 points
It's a fair point on the BoJ. That cautious tone definitely introduces more uncertainty for JPY-funded carry, even if the fundamental weakness persists. I'm curious if you're seeing similar breathing room for other higher-yielding pairs, or if ZAR's specific dynamics are at play here.