JPY: Reflationist BoJ picks flag downside risks – MUFG
|MUFG’s Head of Research Derek Halpenny highlights renewed Japanese Yen underperformance as Prime Minister Takaichi nominates reflationist-leaning academics Toichiro Asada and Ayano Sato to the BoJ policy board. Markets price 15 bps of BoJ tightening for April, but MUFG warns that Deputy Governor Himino’s upcoming speech will be key for confirming that scenario and that failure to validate it could trigger further JPY weakness versus USD/JPY and broader G10.
BoJ appointments reinforce yen downside bias
"There is a clear underperformer today though (and yesterday) and that’s the yen with the government today announcing the picks to replace Asahi Noguchi at the end of March and Junko Nakagawa at the end of June."
"Asada is well known for his reflationist views having co-authored work with former deputy governor Wakatabe in the past."
"15bps worth of BoJ tightening is priced for April and whether that pricing is endorsed over the coming weeks will be crucial."
"If an April hike is being considered we would expect Himino’s tone to at least be consistent with that possibility."
"If he fails to do that there is an increased risk of further yen selling."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.