USD/JPY: UST-JGB spreads point towards the pair remaining elevated – CIBC
|The Bank of Japan (BoJ) maintained policy stability once again. Economists at CIBC Capital Markets expect the USD/JPY to stay on a strong footing.
BoJ Maintains yield curve control
“The bank continues to underline that it expects short and long-term policy rates to remain at ‘present or lower levels.’ That commitment is notable when combined with BoJ Governor Kuroda maintaining that he anticipates no obvious change in the strategy of limiting 10-year JGB yields, under the YCC regime, to 0.25%.”
“Although the monetary authorities are paying attention to the JPY, they are not necessarily signaling a lack of tolerance for JPY weakness, rather they are looking to avoid disorderly moves.”
“As the BoJ signaled that 10-year JGB yields will continue to be capped, UST-JGB spreads point towards USD/JPY remaining elevated.”
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