A back-handed view on the USD/JPY carry trade from what it seems is a reluctant UBS:
- we move our view on the yen from most preferred to neutral
- Given the relative strength of the US economy and the soft removal of Japan’s yield-curve control policy, we see limited catalysts that could outweigh the negative 5% carry that a long yen, short dollar position entails
The analysts are not entirely convinced though, recommending keeping options one via … err, options:
- Nonetheless, we continue to see a long yen position as an effective downside hedge, particularly if implemented using optionality
USD/JPY update: