Pinoy New Era Of Investment

Investment case:

• When the other major central banks begin to make ready to tighten their monetary policies,and the yield spreads widen, we expect mounting pressure against the yen.

• Moreover, it looks as if the deflation spectre is staying, and this means that Japanese interest-rate hikes will not be on the agenda until the second half of 2011, at the earliest.

• The dollar will strengthen against JPY because the up turn will come earlier to the US, higher yield rises in the US.

• The strategy horizon is one year.

Potential/strategy:

We recommend investors to buy a long (1 year) USD/JPY , . The spot reference
is 92.16, and the target price is 106.00.

Risks:

• The diversification of reserves continues, and the issue of the US debt burden may hamper the dollar appreciation.

• A surge of risk aversion may lead to a strengthening of JPY against USD and may have the effect that the yield spread is a less decisive factor.
  

• The US economy slows down, which may cause postponement of interest-rate hikes and thus a weakening of USD.