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Forex pairs in this Article » USD/JPY (Barcelona) - The planned increase in the sales tax will create an uncertain economic scenario in Japan, which leads Mansoor Mohi-uddin, Head of FX at UBS Macro Research, to conclude "the BoJ is likely to agree to a second major increase in quantitative easing under Governor Kuroda next Spring as the sales tax hike looms."

Key Quotes

"We expect that by early next year it become clearer that CPI inflation will struggle to rise to 2% if the yen does not keep weakening sharply. So far the rise in inflation rates has been largely driven by the yen losing 20% of its value over the last year. Without the currency continuing to depreciate, Japan's CPI rises will start to level off well before reaching the 2.0% target."

"With the Fed also likely to be coming to the end of its third round of quantitative easing by then we expect USDJPY will trade in a higher 100-110 range over the next few months and continue to see the currency pair reaching 120 by the time the Fed starts raising rates in 2015."
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