29 Oct 2013
Flash: A correction lower in JPY crosses – BAML
FXstreet.com (London) - Strategists at Bank of America Merrill Lynch By Masayuki Kichikawa, Shogo Fujita, Shuichi Ohsaki and Shusuke Yamada said the BoJ is expected to be on hold for now, but unlikely to rule out further easing in the future, even based on its "optimistic" scenario.
Key Quotes:
“Key is what indications the BoJ gives in its growth and price outlook, and what guidance is shown on monetary policy”.
“With BoJ on hold, we see thin liquidity in JGB as a potential concern. For FX, the near-term risk is a flow-driven correction lower in JPY-crosses”.
We expect BoJ to maintain monetary policy framework
“We do not envisage any change in monetary policy at the 31 Oct BoJ Monetary Policy Meeting (MPM)”.
“Addresses and speeches made by Governor Kuroda and by Deputy Governors Iwata and Nakaso over the past two weeks clearly reveal the BoJ's assessment that both the economy and prices are improving solidly, and that growth in excess of the potential growth rate can be maintained”.
“Although the yen has strengthened to some degree, the yen-dollar rate is still around ¥97/$, while long-term interest rates are low and stable at about 0.6%. There is no emergency that requires BoJ to consider changing the monetary policy at this time, in our view”.
“The coming MPM will be the second during the month of October and will be held for just one day to consider the BoJ's semi-annual Outlook Report (mainly its forecasts for growth and prices). Accordingly, we see two key points of interest: what indications the BoJ gives in its outlook for growth and prices in 2013-15; and what guidance BoJ Governor Kuroda gives on monetary policy at the post-meeting press conference”.
Key Quotes:
“Key is what indications the BoJ gives in its growth and price outlook, and what guidance is shown on monetary policy”.
“With BoJ on hold, we see thin liquidity in JGB as a potential concern. For FX, the near-term risk is a flow-driven correction lower in JPY-crosses”.
We expect BoJ to maintain monetary policy framework
“We do not envisage any change in monetary policy at the 31 Oct BoJ Monetary Policy Meeting (MPM)”.
“Addresses and speeches made by Governor Kuroda and by Deputy Governors Iwata and Nakaso over the past two weeks clearly reveal the BoJ's assessment that both the economy and prices are improving solidly, and that growth in excess of the potential growth rate can be maintained”.
“Although the yen has strengthened to some degree, the yen-dollar rate is still around ¥97/$, while long-term interest rates are low and stable at about 0.6%. There is no emergency that requires BoJ to consider changing the monetary policy at this time, in our view”.
“The coming MPM will be the second during the month of October and will be held for just one day to consider the BoJ's semi-annual Outlook Report (mainly its forecasts for growth and prices). Accordingly, we see two key points of interest: what indications the BoJ gives in its outlook for growth and prices in 2013-15; and what guidance BoJ Governor Kuroda gives on monetary policy at the post-meeting press conference”.