Westpac - "Japanese investment into foreign financial markets has been an important driver for FX markets and one that we have followed for many many years now. So why this slavish devotion to our mythical Mrs Watanabe and her canny investor friends?
(...) through much of the last decade, Japanese investors consistently held around 25% of their (rapidly expanding) foreign assets in Europe. However, the onslaught of the financial crisis saw that shift dramatically. Japanese investors spent much of the 2010/12 period slashing Euro holdings. ‘Safe haven’ currencies like the A$, C$ and NZ$ were a natural investment vehicle, and ownership surged.
(...) this story has started to show signs of reversing.
(...) We have long believed that investors were overplaying European breakup risks and that the policies announced by the ECB late 2011 and through 2012 would be successful in reducing the perception of those risks and hence influence investor behaviour. One of the obvious implications of this would likely be that ‘safe haven’ demand for A$ debt from Toshin funds would fall and for Euro assets would rise. To be sure, Europe has a long history of spoiling this process through political infighting. So a rapid return to Europe seems unlikely for Mrs Watanabe. However, recent data does suggest watching Mrs Watanabe is important again and that €/ safe haven crosses should continue to move higher."