The Bank of Japan (BoJ) left all policy settings on hold as expected. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes USD/JPY outlook.
The BoJ tiptoes toward a policy shift
The Bank of Japan came and did nothing but sound hopeful enough about the outlook for wages and inflation, and negative enough about the side effects of negative rates and yield curve control, to suggest a policy change will be forthcoming after the end of Q1, and by the middle of the year.
The market has read the story of the boy who cried wolf often enough to be a little sceptical but the Yen is helped by a quieter US bond market and by talk of a Chinese plan for equity market support, totalling under 1% GDP, financed by using state-owned companies’ foreign currency holdings. In other words, de facto FX reserves are being repatriated.
We’ll stick to a (fingers firmly crossed) view that USD/JPY has peaked and that we will see a return to levels below 140 in Q2.
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
Hot
-THE END-