Forex Flash: USD/JPY unlikely to go lower on Japanese foreign investment - Nomura

Nomura FX strategists do not expect acceleration in foreign investment out of Japanese equities to lead to any significant JPY appreciation, adding that "higher Japanese equity prices encourage domestic investors to take more FX risks, which will likely offset the JPY-buying impact associated with foreign buying of Japanese equities."

Nomura adds: "In fact, even though foreign investors purchased JPY12.6trn of Japanese equities in 2005 and JPY8.1trn of Japanese equities in 2006, JPY weakened in both years. We do not think the possible further acceleration of foreign investment in Japanese equities will send USD/JPY lower..."