11 Jun 2013
BoJ next: Impact on the USD/JPY
FXstreet.com (Barcelona) - After the ferocious appreciation by the Yen last week, diminishing immediate chances of a Fed QE tapering, and ahead of the BoJ policy decision, in-house chief analyst Valeria Bednarik, thinks there’s room for further yen gains.
In today's meeting, the BoJ should come up with a new set of measures in order to keep the market expectations high enough to sustain the underlying Yen bear trend, Valeria says.
Valeria adds: “The BoJ needs to provide investors with 'something' either, more easing, negative rates, announcements of fiscal stimulus or new measures against deflation, to convince market players of their determination to weaken the yen.”
“A stand on hold will be extremely disappointing for market players, and will likely keep the yen biased higher” Valeria added.
From what one may have gathered in the international press, the main focus is likely to stay on a possible response to JGB volatility and a potential change to maturities of fixed rate operations in order to ease bond market volatility.
Earlier on Tuesday, the Nikkei also reported that the BoJ is weighing the possibility of extending the loans to two years from one although some members were reluctant to take such action.
As Valeria notes, failure to announce responses to stabilise the domestic financial market will likely be seen as disappointment, which should lead to a surge in the JPY.
Traders should expect the announcement between 0330 and 0530GMT.
As Eamonn Sheridan from Forexlive notes: "The more there is for discussion and debate at a meeting, the later the announcement is to be expected, with Governor of the BOJ, Kuroda, also holding a press conference after the meeting and the announcement at 0630GMT.”
As wrote by Yuri Goto, FX strategist at Nomura: "For Kuroda's press conference after the upcoming meeting, one should focus his view on recent inflation expectations movement, as well as the JGB and equity markets. The press conference after the previous meeting was almost entirely about the rise of JGB yields.”
In today's meeting, the BoJ should come up with a new set of measures in order to keep the market expectations high enough to sustain the underlying Yen bear trend, Valeria says.
Valeria adds: “The BoJ needs to provide investors with 'something' either, more easing, negative rates, announcements of fiscal stimulus or new measures against deflation, to convince market players of their determination to weaken the yen.”
“A stand on hold will be extremely disappointing for market players, and will likely keep the yen biased higher” Valeria added.
From what one may have gathered in the international press, the main focus is likely to stay on a possible response to JGB volatility and a potential change to maturities of fixed rate operations in order to ease bond market volatility.
Earlier on Tuesday, the Nikkei also reported that the BoJ is weighing the possibility of extending the loans to two years from one although some members were reluctant to take such action.
As Valeria notes, failure to announce responses to stabilise the domestic financial market will likely be seen as disappointment, which should lead to a surge in the JPY.
Traders should expect the announcement between 0330 and 0530GMT.
As Eamonn Sheridan from Forexlive notes: "The more there is for discussion and debate at a meeting, the later the announcement is to be expected, with Governor of the BOJ, Kuroda, also holding a press conference after the meeting and the announcement at 0630GMT.”
As wrote by Yuri Goto, FX strategist at Nomura: "For Kuroda's press conference after the upcoming meeting, one should focus his view on recent inflation expectations movement, as well as the JGB and equity markets. The press conference after the previous meeting was almost entirely about the rise of JGB yields.”