BoJ to reinforce its dovish policy position - Rabobank


Jane Foley, senior FX strategist at Rabobank, suggests that the US Fed is widely expected to lay the groundwork for easing at today’s FOMC meeting and in line with this and given the BoJ’s struggles to boost inflation, it is possible that the BoJ could tomorrow reinforce its dovish policy position. 

Key Quotes

“Given that the JPY is inclined to be tuned to international events and geopolitics rather than the domestic economy, this may not be sufficient to push USD/JPY significantly higher.”

“A Reuters’ poll conducted between June 5 and 17 indicates that 20 out of 39 forecasters now expect that the next policy move from the BoJ will bring more stimulus. There is no strong consensus as to what form this will take.  Options such as increased buying of ETFs and Japanese real estate investment trusts are thought to be on the table in addition to a further lowering of interest rates.”

“Although it is a majority view that the next BoJ move will result in more policy accommodation, the Reuters survey suggests that there remains a significant minority that view the next move as a hike.  This may seem out of kilter with about-face guidance of the Fed and the ECB in recent months.  It is possible that commentators see little space for the BoJ to ease further given the enormity of its current QQE programme and the difficulties the banking sector has experienced in recent years from the flatness of the yield curve.”

“On the margin dovish policy statements from the BoJ tomorrow should undermine the outlook for the BoJ. However, due to the JPY’s function as a safe haven, its performance tends to be more influenced by the general tone of risk appetite. As a consequence the outlook for USD/JPY is likely to be more heavily bias by whether or not the market see the potential for some sort of resolution in the trade wars between the US and China and potentially by news surrounding Iran.  In view of the current geopolitical risks in addition to slowing world growth we see risk of USD/JPY edging towards the 108.00 level on a 3 month view.”

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD bounces off the lows as the market mood improves

EUR/USD is bouncing toward 1.18, recovering from the fall triggered by upbeat US jobs figures and escalating Sino-American tensions. Investors are eyeing the fiscal stimulus impasse in Washington after Trump's executive order and the market mood has somewhat improved.

EUR/USD News

GBP/USD recovering toward 1.31 as the dollar weakens

GBP/USD has recovered toward 1.31 as the dollar pares early gains amid the impasse in Washington over new fiscal stimulus. A survey showing that a third of UK employers may lay off workers is weighing on the pound.

GBP/USD News

XAU/USD retreats to $2030 after making a run to $2050

Gold prices spiked to the upside after the beginning of the American session but then pulled back erasing gains. XAU/USD jumped to $2049.70/oz, and as of writing, it trades at $2033, practically at the same level it closed on Friday.

Gold News

It is time for King Bitcoin

The crypto board starts the week stuck on critical levels. The war for dominance has been favorable to Ethereum for weeks, and the graphics seem to indicate that it's now Bitcoin's turn to win a few battles.

Read more

WTI: $42.30 is the level to beat for the bulls

WTI (futures on Nymex) climbed nearly 1.50% in a bid to test the $42 mark on Monday, in the wake of the upbeat outlook painted by Saudi Aramco’s CEO Nasser and expectations that Iraq will cut output in August.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures