Technical analysis: USDJPY 2021-07-05 00:00

More big gains for the GPIF

USD/JPY looks to be taking a breather ahead of multi-year resistance around the 112.20/40 area. It is hard to see US rates coming off too sharply from current levels and USD/JPY may well have built a new floor in the 110.40 area. There may not be enough in the calendar to drive USD/JPY through 112.20/40 in the week ahead – but it should stay reasonably well bid.
Last week we were focusing on the release of the GPIF annual report and indeed it was very impressive, returning 25% in the Japanese fiscal year to March 21. Portfolio allocation for the world’s largest pension fund is always a hot topic and there were some quite big changes in the quarter to March. Foreign bond holdings were cut to 24.6% from 25.7% (was the GPIF behind the 1Q US Treasury sell-off?), while both foreign and domestic equity allocations were cut below the 25% benchmark. The big winners were Domestic Bonds, increasing to 25.9% from 23.6% - a more conservative stance from the GPIF.


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