Citigroup Sees Dollar-Yen Rebound Ahead of BOJ Decision
Citigroup's FX strategists are recommending buying a dollar-yen call spread ahead of the Bank of Japan's rate decision, following heavy selling in the currency pair earlier in the day.
The dollar fell 2.5% against the yen to 159.40 on Thursday, prompting analysts to suggest that Tokyo may have intervened to support the currency.
Daniel Tobon, Citigroup senior FX and macro strategist, stated 'We do not think Governor Ueda will be able to out-hawk expectations at tonight's BoJ meeting, which could lead to a disappointment (and may even be the incentive for getting dollar-yen lower ahead of the event).'
Citigroup recommends buying the one-month dollar-yen 160.50/162 call spread, which would generate profit from a recovery in the currency pair above 160.50, with maximum gains reached at 162.