Japanese investors to keep USD/JPY supported - Nomura

FXStreet (Bali) - Yujiro Goto, FX Strategist Nomura, suspects that Japanese investors will continue to invest more in foreign assets, which would be positive for USDJPY in the medium term.

Key Quotes

"The WSJ reported yesterday that the BOJ may upgrade its inflation forecast for FY2014 if the April Tokyo CPI, due to be released on Friday, is strong."

"Unnamed sources familiar with the matter in a WSJ article emphasised that a 2% inflation forecast for FY2015-16 does not necessarily mean the BOJ will consider exiting monetary easing any time soon."

"In addition, one source said that the Bank may first need to "overshoot" the inflation target to make companies and households firmly believe that 2% inflation is here to stay."

"Thus, we expect the Bank to maintain the current easing stance even though it is optimistic on the inflation momentum. Real yields should keep declining as inflation rises gradually while domestic nominal yields remain low."

"Lower yields would encourage Japanese investors to invest more in foreign assets, which would be positive for USDJPY in the medium term."