JPY, CHF flows: JPY and CHF gain as equities slip
JPY and CHF rally as equities turn lower. JPY remains preferred on value grounds
The JPY and CHF are making sharp gains early in Europe as equities trade lower, reversing gains seen in Asia. USD/JPY had managed a significant correction higher over the last 24 hours, but the gains do look to be corrective rather than a reversal of the recent decline. Having traded back up to the trendline broken on Wednesday, the risks now look to be on the downside once again, especially if equity markets turn lower. While the CHF has also benefited from the weaker equity tone, we much prefer the JPY to the CHF on value grounds. CHF/JPY is up 55% in the last 4 years, and there is no longer any yield support for these gains, with 10 year JGB yields now above 10 year Swiss yields, while the CHF advantage at the short end is modest and declining.
