2 Sep 2013
Flash: USD/JPY aiming at 100-105 range into Q4'13 - UBS
FXstreet.com (Barcelona) - In the short term, in view of Mansoor Mohi-uddin, Head of Strategy at UBS Macro Research, USDJPY remains capped by Middle East risks and fiscal policy indecision in Japan, however, Fed tapering and more BoJ easing expected reinforces the idea of a higher trend seeking a 100-105 range into Q4'13.
Key Quotes
"We see USDJPY rising regardless of the government's final decision on the tax hike. If, as expected PM Abe agrees, then declines in the Nikkei and USDJPY next month are likely to raise the pressure on the Bank of Japan to increase its pace of quantitative easing again."
"At its October 30-31 board meeting, the BoJ will also release its semi-annual economic outlook report. If the central bank lowers its economic forecasts on the back of higher sales taxes, it is likely to implement another major step increase in its monthly pace of bond buying, as it did in April."
"Furthermore, the government may decide to soften the blow of higher sales taxes by cutting corporate tax rates. That will also help sentiment towards the Nikkei."
Key Quotes
"We see USDJPY rising regardless of the government's final decision on the tax hike. If, as expected PM Abe agrees, then declines in the Nikkei and USDJPY next month are likely to raise the pressure on the Bank of Japan to increase its pace of quantitative easing again."
"At its October 30-31 board meeting, the BoJ will also release its semi-annual economic outlook report. If the central bank lowers its economic forecasts on the back of higher sales taxes, it is likely to implement another major step increase in its monthly pace of bond buying, as it did in April."
"Furthermore, the government may decide to soften the blow of higher sales taxes by cutting corporate tax rates. That will also help sentiment towards the Nikkei."