UBS says beware of temporary USD/JPY pullback as the speed and scale of recent gains has built up sizable imbalances. Speculative short-JPY IMM positions are close to record highs, and USD/JPY is now above levels implied by US and JGB yields. The bank also notes USD/JPY's rally has been driven almost entirely by non-Japanese investor buying, which is similar to the pattern seen in February-March when the BoJ adopted an inflation goal. That move eventually lost steam for the want of Japanese participation, a lesson that should not be forgotten says the bank. USD/JPY now at 85.67.
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