Improving growth prospects have been lowering the chance of the BoJ considering a more dovish monetary policy stance anytime soon. This is especially true as improving manufacturing sector-related business activity indicates rising export growth.
However, we remain of the view that the JPY should be sold on rallies, in particular against higher yielding currencies such as the AUD.
In an environment of stable central bank rate expectations the currency should become more driven by global risk sentiment, which we expect to improve further towards the end of the year. This is mainly due to additional room of improving global growth expectations and as global central banks are likely to keep a relatively dovish stance.
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