Good things may come in threes but the Bank of Japan was not nearly as dovish this month as the Fed and ECB. Yen strategist Taisuke Tanaka argued that eventual BoJ easing will come between April and July following replacement of two policy board members with QQE proponents. This easing may come in the form of increased ETF and REIT purchases rather (or in addition to) further rate cuts.
What next?
It will likely take several months for the Fed to hike and USD/JPY is likely to remain top heavy for the time being. Any rebound above 114 will be a sellers’ market for Japan hedgers.
Continued disappointment in the limited USD/JPY recovery may greatly decrease the market’s respect for Bank of Japan policy.
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