Experts at Rabobank share their outlook for USD/JPY ahead of the Bank of Japan’s (BoJ) policy conference later on in the week.
Market will look out for indications of any modification in BoJ’s bond purchasing program
“It is our home view that the Fed is most likely to begin its rate cutting cycle in September. If United States financial information support this view, the USD might begin to edge lower in the summer season which would likely enable the JPY to discover some purchase versus the USD. In the meantime, the MoF will be wishing for an enhancement in Japanese financial information to keep the JPY bears at bay.”
“An upward modification to the BoJ’s CPI inflation projection at today’s policy conference might pay for a little security to the JPY, though this would have more effect if policy-makers examine that locally driven rate pressures have actually increased.”
“In addition to its policy rates, the marketplace will likewise be looking out for indications of any modification in the BoJ’s bond purchasing program. If the BoJ is evaluated by the market as doing not have any hawkish signals, disadvantage pressure in the JPY would likely increase recommending more pressure on the MoF to put its cash where its mouth is. Our 3 month USD/JPY 148 projection presumes that the Fed will be preparing for a September rate cut throughout the summertime.”
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