JPY strengthens ahead of BOJ rate decision – BBH
|The Japanese Yen (JPY) gained against most major currencies as markets anticipate the Bank of Japan’s first rate hike since January, with PMI data showing modest growth and investors looking for clues on the central bank’s policy normalization path, BBH FX analysts report.
Market eyes BOJ neutral rate guidance
"JPY is up against most major currencies. Japan PMI slips in December, but the growth outlook remains encouraging. The composite PMI dipped to 51.5 from a three-month high of 52.0 in November with services growth easing while the manufacturing sector contraction eased."
"The Bank of Japan (BOJ) is widely expected to raise the policy rate 25bps to 0.75% (Friday). It will be the first rate hike since January. Comments about the neutral rate could offer clues about the extent of the normalization cycle. The BOJ currently estimates the neutral rate to be within a wide range between 1% and 2.5%."
"Earlier this month, BOJ Governor Kazuo Ueda said the bank is trying to see if it can narrow down the range and it will make it public if it succeeds in doing so. A tighter neutral rate range would clarify the BOJ’s policy path and bode well for JPY. The swaps curve implies a policy rate of 1.50% over the next two years. We see room for USD/JPY to adjust lower towards the level implied by US-Japan two-year bond yield spreads around 140.00."
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.