USD/JPY: Upside scope is diminishing – MUFG

BoJ will meet Friday with a consensus of no change. Economists at MUFG Bank expect the USD/JPY pair to struggle to enjoy gains.

BoJ in focus at Kuroda’s last meeting

“Next Friday is not without risks of a surprise although we err on the side of bold changes to YCC being left to Ueda. The Diet is likely to confirm the nominees next Friday as well and of course, we have the NFP data from the US.”

“Assuming no surprise, USD/JPY will continue to take its lead from US yields and hence the jobs data will be key. But YCC speculation is unlikely to subside and given the dysfunctional JGB market conditions we see strong justification for an end to YCC possibly at the 16th June policy meeting.”

“In those circumstances, we see limited scope to the upside for USD/JPY, especially given the upside for US yields should also become more limited from here after the surge in yields in February.”