7 Apr 2014
No much downside risk for USDJPY on today's BoJ decision - Nomura
FXStreet (Bali) - Yujiro Goto, FX Strategist at Nomura, expects the BOJ to leave its policy unchanged today (7-8 April).
Key Quotes
"Economic data released recently, such as the March BOJ Tankan survey and February industrial production, were not strong, suggesting downside risks to the economy after the sales tax hike."
"At the same time, inflation momentum remains strong, while inflation expectations also keep rising gradually. Governor Kuroda's recent comments suggest the Bank remains confident about achieving its 2% inflation target. Thus, the BOJ is unlikely to take action for now."
"Market expectations for an early easing have been declining, and we do not expect the likely decision to leave policy unchanged to send USDJPY significantly lower. The March JCER survey (24 Feb to 3 Mar) suggests only 23% of BOJ watchers expect the BOJ to ease by end-April, even though 56% had expected it in January."
"Our client survey (27 Mar) showed only 4% of investors expect the BOJ to ease next week. Only 21% of clients expect the BOJ to ease by end-April. In addition, no BOJ watchers expect the BOJ to ease next week (out of 36), according to Bloomberg. Only 4 researchers (11%) now expect the BOJ to ease at the 30 April meeting as well, while 16 researchers (44%) judge July as the most likely timing for easing. Expectations for near-term easing are clearly declining."
"As our client survey suggests, offshore investors may expect a bit more from the BOJ and thus, USDJPY may still dip after the BOJ’s decision. Nonetheless, we do not see much downside risk for USDJPY, and USDJPY could keep appreciating gradually even without BOJ easing."
Key Quotes
"Economic data released recently, such as the March BOJ Tankan survey and February industrial production, were not strong, suggesting downside risks to the economy after the sales tax hike."
"At the same time, inflation momentum remains strong, while inflation expectations also keep rising gradually. Governor Kuroda's recent comments suggest the Bank remains confident about achieving its 2% inflation target. Thus, the BOJ is unlikely to take action for now."
"Market expectations for an early easing have been declining, and we do not expect the likely decision to leave policy unchanged to send USDJPY significantly lower. The March JCER survey (24 Feb to 3 Mar) suggests only 23% of BOJ watchers expect the BOJ to ease by end-April, even though 56% had expected it in January."
"Our client survey (27 Mar) showed only 4% of investors expect the BOJ to ease next week. Only 21% of clients expect the BOJ to ease by end-April. In addition, no BOJ watchers expect the BOJ to ease next week (out of 36), according to Bloomberg. Only 4 researchers (11%) now expect the BOJ to ease at the 30 April meeting as well, while 16 researchers (44%) judge July as the most likely timing for easing. Expectations for near-term easing are clearly declining."
"As our client survey suggests, offshore investors may expect a bit more from the BOJ and thus, USDJPY may still dip after the BOJ’s decision. Nonetheless, we do not see much downside risk for USDJPY, and USDJPY could keep appreciating gradually even without BOJ easing."