USD/JPY: Risk Index Up But Details Less Constructive: Risk Of A Pullback - Credit Agricole

At -0.95 (vs -0.70 on 9 February 2017) our risk index moved further into risk seeking territory.

This is regardless of higher equity market volatility and mainly due to lower FX volatility. Details are less constructive when considering that demand for defensive stock market sectors rose and that precious metals were in demand. This may point to rising safe haven demand due to ongoing political uncertainty related to the US and Europe.

Pairs such as USD/JPY remain sensitive to global risk sentiment. All of the above coupled with still elevated long positioning suggests the risk is for renewed weakness towards the lower end of the last few weeks’ trading range.

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