USD/JPY all eyes on the BoJ – Westpac

Sean Callow, Senior Currency Strategist at Westpac, and Macro Strategist Martina Song have noted the relevance of tomorrow’s BoJ meeting.

Key Quotes

“The pressure is on the Bank of Japan to deliver, with local media indicating the government will err on the aggressive side in terms of the fiscal package. Reports of direct spending within the plan have doubled over the past week, with the latest bid JPY7trn, almost 1.5% of GDP”.

“The BoJ has shown this year it is willing to disappoint markets and some will sell USD/JPY into any headlines on the assumption that rallies will remain fragile”.

“However, we look for the BoJ to deliver enough tweaks to policy to soften the yen multi-day/week, even if the kneejerk response is sceptical. Steps could include increasing annual QE from JPY80trn to 85-90trn, targeted negative interest loans and doubling ETF purchases”.