Forex Flash: The new BoJ may set 95.00 as level of equilibrium; only 20% priced in USD/JPY? - Nomura
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USD/JPY
FXstreet.com (Barcelona) - While it is too premature to evaluate the precise character of the 'new BoJ', there are three key questions, according to the FX team at Nomura: "First where would JPY be without changes in BOJ policy? Second, where would JPY likely trade if there were a profound change in BOJ in 2013? Finally, what is the probability of such a change in BOJ policy?"
In Nomura's view, "USDJPY at 79 would represent equilibrium for the 'old BOJ', while 95 would be the new level if there were a truly 'new BOJ'. With spot at 82.50, we could argue that the implied probability of a 'new BOJ' is priced at 20%" they say. For now, and subject to further evaluation of developments in Japan, potential is for USDJPY to continue drift higher, Nomura says.
In Nomura's view, "USDJPY at 79 would represent equilibrium for the 'old BOJ', while 95 would be the new level if there were a truly 'new BOJ'. With spot at 82.50, we could argue that the implied probability of a 'new BOJ' is priced at 20%" they say. For now, and subject to further evaluation of developments in Japan, potential is for USDJPY to continue drift higher, Nomura says.
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