USD/JPY: Flows Supporting Bearish Outlook - BTMU
Market expectations for extra monetary easing by the BoJ have been growing in the past few days.
Key Quotes:
"The
Nikkei has recovered to above the 17,000 level, but even with the
Nikkei’s notable recovery, USD/JPY topside has been heavy and USD/JPY
stayed below the 110 level.
Underlying USD/JPY flows still
support JPY strengthening. Next week’s key events are the April FOMC
(26-27) and BoJ meetings (27-28).
We do not expect the BoJ to
expand monetary easing at this stage. The key factors surrounding the
yen and Japan’s economy have shifted from the BoJ’s negative interest
rate policy to fiscal stimulus and political triggers, G-7 summit in May
and the Upper House election in July.
We are also watching risk
appetite among Japanese companies and investors, who are still being
cautious despite becoming acclimatized to negative interest rates. The
results of the by-elections in Kyoto and Hokkaido on April 24 will be
the next political events."
