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Forex pairs in this Article » USD/JPY (Barcelona) - According to Yujiro Goto, FX Strategist at Nomura, uncertainty about the tax hike debate may still be present for the next few weeks, putting downside pressure on USDJPY.

Key Quotes

"We still expect the government to implement the tax hike as scheduled, and the second estimate of Q2 GDP, which will be released on 9 September, will be important data for the decision."

"We expect the second estimate to be strongly upwardly revised, which will pave the way for the scheduled tax hike. Financial Statement Statistics of Corporations by Industry, which will be released by the MOF on 2 September, are an important ingredient of the second estimate, and banks and brokers are likely to release their forecast of the GDP growth rate."

"If strong opposition to the tax hike leads to a bigger economic stimulus to offset the negative impact, not a postponement of the tax hike, a final decision made by Prime Minister Abe in late-September or early-October could be positive for USDJPY, not just decrease the downside risk of it. Thus, we will monitor not only the decision on the tax hike, but also measures offsetting the negative impact at the meetings next week."
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