22 Jan 2014
Flash: BOJ to keep policy unchanged, sell into Yen strength - Nomura
FXstreet.com (Bali) - The BOJ is likely to leave policy unchanged again today, notes Yujiro Goto, FX Strategist at Nomura.
Key Quotes
"Inflation has been gradually rising as the BOJ expected, and machinery orders and production plans indicate that business activity is likely to be stronger for the time being while household spending remains strong before consumption tax hike. Governor Kuroda reiterated that the economy is on track to achieve 2% inflation last week, suggesting the BOJ still feels comfortable with current policy."
"Expectations for a January easing among domestic investors are also low. While 4 out of 39 researchers expect a January easing according to the JCER December survey, only one expects an easing in January survey. Thus, the decision to leave policy unchanged will have a limited impact on the FX market."
"The Bank will also release its interim assessment of the Outlook report, reviewing the economy and inflation forecasts. Kyodo (local media) reports that the Bank is likely to keep its current forecast that inflation will reach 1.3% in FY14 and 1.9% in FY15."
"While the BOJ's inflation forecasts for FY14 and FY15 are more optimistic than private forecasters, it is very unlikely for the Bank to downgrade them at this point, as actual inflation momentum has been strong."
"If the Bank shows more optimistic economy and inflation forecasts, expectations for an early easing would decline, likely sending USDJPY and Nikkei lower slightly. During the press conference, Governor Kuroda is also likely to reiterate his optimistic view that the economy is on track to achieve 2% inflation."
"The BOJ meeting this week may decrease expectations for an early easing, via the economic forecast and Kuroda’s optimistic view at the press conference, likely sending USDJPY and Nikkei lower slightly. We view a dip after the meeting, if any, as a good opportunity to buy USDJPY."
Key Quotes
"Inflation has been gradually rising as the BOJ expected, and machinery orders and production plans indicate that business activity is likely to be stronger for the time being while household spending remains strong before consumption tax hike. Governor Kuroda reiterated that the economy is on track to achieve 2% inflation last week, suggesting the BOJ still feels comfortable with current policy."
"Expectations for a January easing among domestic investors are also low. While 4 out of 39 researchers expect a January easing according to the JCER December survey, only one expects an easing in January survey. Thus, the decision to leave policy unchanged will have a limited impact on the FX market."
"The Bank will also release its interim assessment of the Outlook report, reviewing the economy and inflation forecasts. Kyodo (local media) reports that the Bank is likely to keep its current forecast that inflation will reach 1.3% in FY14 and 1.9% in FY15."
"While the BOJ's inflation forecasts for FY14 and FY15 are more optimistic than private forecasters, it is very unlikely for the Bank to downgrade them at this point, as actual inflation momentum has been strong."
"If the Bank shows more optimistic economy and inflation forecasts, expectations for an early easing would decline, likely sending USDJPY and Nikkei lower slightly. During the press conference, Governor Kuroda is also likely to reiterate his optimistic view that the economy is on track to achieve 2% inflation."
"The BOJ meeting this week may decrease expectations for an early easing, via the economic forecast and Kuroda’s optimistic view at the press conference, likely sending USDJPY and Nikkei lower slightly. We view a dip after the meeting, if any, as a good opportunity to buy USDJPY."