USD/JPY: Markets should believe governments' denials of Aminaya’s nomination – Commerzbank

In addition to the general USD strength, the Yen got a good battering this morning. The reasons were rumors that Masayoshi Amamiya would become the new governor of the BoJ. But Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, expects the Japanese government to nominate another candidate.

Rumours about Kuroda’s successor

“Amamiya is seen as a close ally of the current BoJ governor Haruhiko Kuroda. That means: the nomination of Amamiya would make it seem plausible that the BoJ continues its ultra-expansionary monetary policy and that the small restrictive step was nothing but a completely unsuccessful attempt at smoothing out the distortions that have been caused by the yield curve control.”

“Of course, the government rushed to deny the rumors of the nomination of Amamiya. But as is often the case: denials can never be so good as to not leave a small residue of doubt.” 

“It might make sense for the Japanese government to install a governor of the BoJ who is not quite as dogmatically committed to ultra-expansionary monetary policy as Kuroda and Amamiya. Due to these considerations, I tend towards believing the governments' denials more than the market does.”