USD/JPY – NEUTRAL BIAS – (99.00-102.00)
USD/JPY has pulled back to the 100-level, in line with our view, in
the wake of the two monetary policy events at the Fed and BoJ this week.
Monetary policies in the US and Japan have not diverged further.
ahead, Japanese exporters will likely buy more JPY close to the end of
the month, as the gap between their predicted level and the actual
USD/JPY level remains wide.
Investors may also repatriate revenue from overseas. The BoJ’s
decision was quite technical and not easy to respond to, as there may be
less rationale on how to control the JPY yield curve at this stage. We
will be watching actual monetary policy operations, especially how the
BoJ is able to control the 10Yr yield curve through JGB purchases and
10Yr fund supply operations.
At this stage, we maintain our view that JPY will strengthen in line with trade and capital flows close to the end of fiscal 1H.