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INTERVIEW


currency reserves – approaching half a trillion Swiss Francs. This is now more than the yearly output of the Swiss Economy – what’s the faith of the CHF going forward?


HR The outlook for the Swiss Franc heavily depends on the outlook for


the Eurozone.


If Europe dips into an even deeper recession it might cause concern about the banking sector in the peripherals again


terms of international portfolio holdings


and deposit holdings


might have a negative impact on the sector, which in consequence, might lead to a weakening of the CHF in the long term.


FXTM We have had a correction phase in


FX


concerned about the increased volatility in the Japanese bond market. Our economists and rates strategists think that the Japanese taking


government is long as not the necessary measures


to reduce volatility levels. Finance minister Aso recently indicated that as


there


is asset volatility in Japan, the BOJ might stay on the sidelines, which means that market positioning is most


significantly and


depositors might start transferring their deposits from peripheral banks to a safer environment, which would lead to a strengthening of the CHF. However, Draghi ’s ‘all it takes’


speech and


emphasized in the USDJPY. There is a lot of leveraged money


sitting


in USDJPY and when the pair seizes to appreciate further,


this


leveraged money is looking


for better


the introduction of the OMT has s i g n i fi c an t l y reduced the tail risks since July of last year. Recent data shows that deposits have started moving back into peripheral Europe, which might


“The not will


have a negative impact


on the CHF and would be the main reason for a potential drop. Additionally,


the transformation


of the Swiss banking system towards more transparency in


HR The correction of the Yen is not


over yet. We have been


warning clients over the last couple of weeks because we were


weakening


temporary, stay


of it’s a the yen trend


the broad JPY weakness. Is this correction over now and will we see another leg lower in the JPY?


is that with us for many years”


deployment of its working capital. We think that it wil l


lead to a


further USDJPY correction, but it


should not be confused with a reversal of


the trend. We regard


this drop in the pair to be another opportunity to buy US Dol lars again.


FXTM Where do you see USDJPY in the next year?


FX TRADER MAGAZINE July - September 2013 31


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