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Yen in focus ahead of BoJ statement

Four markets in focus today: USD/JPY, USD/BRL, USD/MXN and Seek.

USD/JPY

The pair looks supported on moves to 103.00 and all eyes now fall on today’s BoJ meeting. As usual there is no set time for any announcements, but usually they release details between 1pm and 4pm AEST. No one is expecting further easing measures, but they could give hints as to more in upcoming meetings.

USD/BRL

The Brazilian real is in huge demand right now and has been helped by the huge yields on offer, and with the carry trade working well, anything with a high yield is bid. There has been a strong move in the pair after hitting a high of 2.4694 on January 29 and is now testing the uptrend from the 2011 low. When you see the JP Morgan FX volatility index at the lowest level since late 2012, the conditions look ripe for carry appreciation.

USD/MXN

Another currency with a strong yield, it also has the advantage of liquidity, neutral positioning and has seen better data of late. There is an IPO process about to ramp up as well, which could see better capital inflows. If the carry trade continues in earnest, then the MXN is worth a look.

Seek (SEK)

Seek is a quality business and at the right price it will be supported by value-focused investors. The future earnings profile, mixed with strong return of capital and free cash flow make this a stand out business. However as we saw yesterday, traders and investors are looking at valuations again and this stock could struggle in the short term because it’s trading on 27x (a 40% premium to the five year average).

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