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Forex pairs in this Article » USD/JPY
FXStreet (Bali) - According to Greg Gibbs, FX Strategist at RBS, pressure on BoJ to ease again is mounting.

Key Quotes

"The BoJ has proven to be very stable with its QQE policy, sticking essentially with the same targets since it was implemented in April 2013 (60 to 70 tn money base expansion per year), resisting calls from time to time to enhance the program. For the most part this has served the BoJ well with the economy strong, inflation expectations steadily rising, the property market strengthening, the JPY remaining on a weakening trend and equities rising. However, the pressure is again mounting on the BoJ with the Q4 GDP report much weaker than expected, machine orders falling sharply in December, recent forward looking confidence surveys dipping and the 1 April first consumption tax hike since 1997 closer on the horizon."

"Pressure on the BoJ for more action includes the recent under-performance of the Japanese equity market. Over the 14 months since the end of 2012, Japanese equities in USD terms (cutting its gains down to size due to JPY depreciation) roughly matched the strong performance in the US and European equity markets up to the last week of January. However, since then, with a relatively weak Nikkei and a firmer JPY, Japanese equities have been one of the worst performers losing around 10% relative to the US and Europe markets over that period and about 6% outright."

"The JPY itself is the strongest global currency year to date up 3.3% against the USD that has made gains against a raft of emerging market currencies, albeit JPY was trading on its long term lows at the end of 2013."

"There appears little expectation on the street that the BoJ will hint towards more action in its policy statement to be released today. However, the risk is that they do suggest a preparedness to take more action if the economy shows evidence of stalling. RBS economists expect no change in BoJ policy despite recent data weakness noting that more broadly the BoJ "has a positive view of how its quantitative and qualitative easing programme is working thus far"."
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