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Forex pairs in this Article » USD/JPY (New York) - According to Sean Callow, a Global FX Strategist at Westpac, “Of extreme importance for the JPY will be the two-day BoJ meeting which is an ‘interim assessment’ meeting i.e. a quarterly update.”

Wires have been suggesting the BoJ will not make any policy moves next week although given the raised assessment in eight of nine regions announced today, an upgrade to the outlook is possible. We agree – the BoJ has close to zero capacity to increase monetary policy stimulus here.

All the focus should be on the upcoming Japanese upper house election on July 21 (as coincidence would have it 4 days after Bernanke’s semi annual testimony). Voters will go to the polls to elect half of the 242 seats in the upper house. “Abe is expected to romp home and this simply has to be good news for the coveted ‘third arrow’. So we switch our bias to buying dips, though we are inclined to wait for those dips.”
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