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Currently our stance is long across the Yen.
What impact would have European leader's meeting this week on Yen?
I think it depends. Another thing to watch for is the Fed's actions as well. I think there is an expectation of risk-on type of outcome of the European leader's meeting. There have been heightened market expectations around the ECB, as Mario Draghi said he would do whatever it takes and committed to support the short end of the sovereign curve. In that type of scenario it should be positive for cross Yen currency pairs because of the general risk response.
What is your forecast for USD/JPY and EUR/JPY for the end of the year and what drivers will determine Yen's performance in the short and long run?
Our forecast for USD/JPY for the end of 2012 is 82 and for the Q1 of 2013 is 83. Thus, we are expecting a small rise from here.
As to EUR/JPY, we anticipate the pair to trade at 94.3 this year. Thus USD/JPY is higher, while EUR/USD is weakening, and therefore EUR/JPY is lower from here, because EUR/JPY is mainly driven by EUR/USD performance.
In terms of USD/JPY it is also very important what the Fed does as well, because a lot of moves in USD/JPY have been related to the U.S. yields. It partially depends upon QE3 and also the timing of the asset purchase programme as well. Moreover, if USD/JPY weakens, there might be the Bank of Japan's interventions. The point with intervention is that it kind of puts a floor on the spot. However, at this stage, where the spot is, this is not an issue.