USDJPY: Flip back to a sell bias - Westpac

Robert Rennie, Research Analyst at Westpac, suggests that after having re-read BoJ Governor Kuroda’s speech several times, he cannot help but be struck by the sense that any further policy developments will be hard fought.

Key Quotes

“Kuroda spent some time talking to the potential negative impact that more NIRP might have on “people's confidence by causing concerns over the sustainability of the financial function in a broad sense”.

Our sense is that more NIRP and an operation twist like move would be the likely outcome of a “comprehensive assessment of monetary policy” that concluded that more JGB asset purchase would be hard to engineer. As such, what reads like a cautious approach to BoJ monetary policy adds to downside risks for USD/JPY, especially coming the same day as an unchanged Fed. So we flip back to a sell bias on USD/JPY from neutral last week.”