USD/JPY may turn lower in the event BoJ surprises on Friday – OCBC

USD/JPY rebounded sharply last week. Economists at OCBC analyze the pair’s outlook ahead of BoJ meeting.

Risk for USD/JPY is asymmetric going into the MPC

Our house view still expects the BoJ to move away from YCC, NIRP regime at some stage this year as inflationary pressures broaden; growth outlook improves and upward pressure on wage growth remains intact. 

In the event BoJ surprises on Friday, then we may see USD/JPY turn lower as markets may be caught wrongfooted. 

We believe the risk for USD/JPY is asymmetric going into the MPC.