Japan: Talks of a Y20trn fiscal package hits the newswire - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that the yen’s retreat continues as talk of a Y20trn fiscal package hits the newswire, accompanied by anticipation that the BOJ will further increase the pace of its bond-buying.

Key Quotes

“USD/JPYT is tracking the US/Japanese real yield differential very faithfully, and is also encouraged, as usual, by a general ‘risk-on’ market mood that has seen the Nikkei gain almost 8% so far in July, twice the gains of other major indices. The BOJ meeting isn’t for another week, so there’s plenty of time for speculation to rule the roost and for now, yen weakness looks set to continue while a quieter time for US data allows equities to rally and the market in general chooses to see the aftermath of the coup attempt in Turkey as a local issue and the US Republican party Conference as a side-show.

Looking at relative real yields however, may give the impression that the BOJ is in sole charge of the yen’s destiny.”