EFTA Document EFTA01479707

Subject: FX Indicative Level - USDJPY triple no touch (expires 11/20/14) [C] From: Tazia Smith a> Date: Tue, 02 Se 2014 09:00:49 -0400 To: Cc: Paul Morris < Vahe Stepanian Classification: Confidential Rich - Indicative level on the JPY triple-no touch client receives net premium of $41,503 (+$41,503 p/l). Detail below. DB Research's view is that if the cross can break through 105, it will break out to 110 (see commentary below). Note: 2 day BOJ meeting starts tomorrow. Reminder: as you know, this is a small notional trade on a relative basis vs. JE's other positions. Best Regards, Tazia Indicative levels, subject to market movement. Source: DB FX Pricer, 9/2/14. USDJPY Spot Ref: 104.93 <Client> sells European USD Call on USD/JPY Strike: 101 Notional: USD 1,000,000 Expiry: Thu 20-Nov-2014 Settlement: Tue 25-Nov-2014 ZoneCut: NY Premium: USD -39,150 Premium Date: Thu 04-Sep-2014 Leg 2: One Touch <Client> sells One Touch on USD/JPY payout Barrier: 99 Payout: USD 16,500 Payout Ccy: <PayCurrency> Postpone Rebate: <PostponeRebate Y/N> Expiry: Thu 20-Nov-2014 Settlement: Tue 25-Nov-2014 ZoneCut: NY Premium: USD -1,266.38 Premium Date: Thu 04-Sep-2014 Leg 3: One Touch EFTA01479707 <Client> sells One Touch on USD/JPY payout Barrier: 98 Payout: USD 15,000 Payout Ccy: <PayCurrency> Postpone Rebate: <PostponeRebate YIN> Expiry: Thu 20-Nov-2014 Settlement: Tue 25-Nov-2014 ZoneCut: NY Premium: USD -707.85 Premium Date: Thu 04-Sep-2014 Leg 4: One Touch <Client> sells One Touch on USD/JPY payout Barrier: 97 Payout: USD 13,300 Payout Ccy: <PayCurrency> Postpone Rebate: <PostponeRebate YIN> Expiry: Thu 20-Nov-2014 Settlement: Tue 25-Nov-2014 ZoneCut: NY Premium: USD -378.78 Premium Date: Thu 04-Sep-2014 Net Premium: <Client> Receives USD 41,503 Forwarded by Tazia Smith on 09/02/2014 08:55 AM From: "Taisuke Tanaka, Deutsche Securities Inc." To: Tazia Smith Date: 08/21/2014 02:42 AM Subject: DEutsche JApan View on FX - USD/JPY: Stay bullish Deutsche Securities Inc. - Fixed Income Research DEutsche JApan View on FX - USD/JPY: Stay bullish 21 August 2014 (1 page/ 192 kb) Download the complete report: http://pull.db-gmresearch.com/p/- 589-48F3/26441267/DB_DEJAViewFX_2014-08-21_0900b8c088a52a87.pdf There are reasons to believe that the USD/JPY uptrend is sustainable. EFTA01479708 The USD/JPY is trying to resume an uptrend. The laggard housing sector recovery had been raising concerns about the US economy, but, as suggested by the leading NAHB indicator, housing starts data showed a sharp increase in July. Also, the July FOMC minutes confirmed that committee members are considering the possibility of increasing policy rates sooner. We see the USD/JPY uptrend continuing through 2015 and into 2016, and think the rate could ultimately overshoot 120. Our reasoning is as follows: 1) The US economy's recovery cycle: Once underway, a sustainable cycle should last a few years. We see US interest rates rising (albeit slowly), and continuing to support the USD/JPY. 2) EUR depreciation: With the wrapping up of purchasing operations after the sovereign debt crisis in Southern Europe, the EUR appears to have fallen to a downtrend that reflects the economic and monetary policy gap with the US. USD appreciation facilitates EUR depreciation, and a weakening EUR should continue to reinforce a strengthening USD. 3) Japanese money: Japan's institutional and individual investors have been steadily buying foreign currencies on dips. Their positions are a long way from completely factoring in JPY depreciation. As the JPY weakens, these investors will likely raise the dip levels that they buy on, and continue supporting the JPY depreciation trend. Public pensions are already providing strong support by increasing their overseas investments. 4) Sentiment: The consensus forecast tends to converge around current market levels and recent momentum. As a result of the market deadlock around 102 that continued for several months, average medium term forecasts were down to around 105 by the end of July. Once the USD/JPY regains 105, the consensus forecast for the next 3-12 months would easily rise beyond 110. 5) Speculation: Overseas speculators had been decreasing JPY-shorts until recently, meaning there is amply leeway for JPY selling to help the JPY depreciation trend resume. Even if they start taking profits, the USD/JPY uptrend should be supported by Japanese investors buying on dips. Speculators should find repeatedly entering JPY-shorts to be an effective strategy. 6) Abenomics: If the US economy were weak, then yen depreciation and rising stocks could not be called Abenomics' policies, and Abenomics would be a disappointment. However, if a strong US economy facilitates a rising USD/JPY and outperformance by Japanese stocks, then Abenomics should somewhat reinforce sentiment for JPY depreciation and rising stocks. Prime Minister Abe will shuffle his cabinet in September, and appears resolved to continue implementing a revamped Abenomics. 7) BoJ's quantitative and qualitative monetary easing: If the JPY depreciates and stocks rise then we do not think the BoJ will have to implement additional easing. However, it will not likely reach its 2% EFTA01479709 inflation goal, even as we approach the initial two year target period. The quantitative and qualitative monetary easing policy being prolonged beyond the second year would mean continuing support for JPY depreciation. Taisuke Tanaka (+81) 3 5156-6714 - [email protected] Tazia Smith Director I Key Client Partners - US DB Securities Inc Deutsche Asset & Wealth Management 345 Park Avenue, 10154-0004 New York, NY, USA Tel. Fax Mobile Email Click/ copy this link into a browser to access the report: http://pull.db- gmresearch.com/p/589-48F3/26441267/- DB_DEJAViewFX_2014-08-21_0900b8c088a52a87.pdf. If you have any difficulty accessing the report, please forward this email with the word 'PDF' in the subject line to [email protected]. After 90 days you can access the report on our web site: http://gm.db.com. You have received this mail because you have subscribed to DEutsche JApan View on FX For changes to your current research subscription, visit https://gm.db.com/- rsm or email [email protected]. Please refer to the applicable legal disclaimers in the full report. Mail Reference:0900b8c088a52a87/[email protected] EFTA01479710