Bank of America / Merrill Lynch like a short EUR/JPY and short USD/JPY
Concerns of negatives to increase in markets ahead of the G20 (June 28/9). Has the potential to see risk off sentiment.
- recommend selling USD/JPY
BoA says markets are complacent (cite low volatility)
- “We have a relatively optimistic view for the end game, but are concerned that things can get worse before getting better”
Risk is a comprehensive agreement at the G-20, but even if so, re-pricing of the Fed to limit risk-on market move, which would limit the downside for yen.