Robert Rennie, Research Analyst at Westpac, points out that despite valiant attempts by BoJ Governor Kuroda to emphasise that “we are not at the stage of considering an exit from monetary easing”, the seeds of a sharp ¥ move were arguably sown when BoJ MPC members again revised up the lower end of both GDP and CPI forecasts for 2018 last week.
“We have long argued for greater clarity around the current YCC policy, especially given the ongoing APP of ‘more or less’ ¥80tn of JGBs (something the BoJ has not done in over a year).”
“However, the FOMC next week and solid support in the 108.00/50 region should be enough to maintain the lower end of the current 108 to 114 range - for now.”
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