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14 Feb 2014
Flash: USD/JPY outlook deteriorating? - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ, noted the BoJ may be forced to act in the upcoming weeks.
Key Quotes
"If weaker growth undermines the dollar further from here, the greatest implication of that might be concerns in Japan over the direction of USD/JPY. Next week, the BOJ monetary policy meeting will take place and the wide consensus is that the BOJ will do nothing."
"However, there are emerging signs that ‘Abenomics’ may be losing some of its allure and that will certainly concern the BOJ. The Topix Index is down in yen and dollar terms by 9.1% and 6.0% respectively since the start of the year in contrast to the 1.0% drop in the S&P 500."
"Japan is not only under-performing the US but all of Europe and Asia too. If this continues next week’s BOJ meeting might well be the last in which there is little market pressure on the BOJ to take action."
"A breach below the 100.00 level is now an increasing near-term risk and if the equity market falls further the outlook for inflation in Japan will quickly deteriorate. The emerging market volatility in January and the slowdown in the US also appears to have scuppered the expected exporting of capital from Japan."
"Japan has yet to record any foreign bond buying since the start of the year. The latest weekly data revealed another net sale worth JPY 617bn and the total repatriation back to Japan this year now stands at JPY 3,964bn."
Key Quotes
"If weaker growth undermines the dollar further from here, the greatest implication of that might be concerns in Japan over the direction of USD/JPY. Next week, the BOJ monetary policy meeting will take place and the wide consensus is that the BOJ will do nothing."
"However, there are emerging signs that ‘Abenomics’ may be losing some of its allure and that will certainly concern the BOJ. The Topix Index is down in yen and dollar terms by 9.1% and 6.0% respectively since the start of the year in contrast to the 1.0% drop in the S&P 500."
"Japan is not only under-performing the US but all of Europe and Asia too. If this continues next week’s BOJ meeting might well be the last in which there is little market pressure on the BOJ to take action."
"A breach below the 100.00 level is now an increasing near-term risk and if the equity market falls further the outlook for inflation in Japan will quickly deteriorate. The emerging market volatility in January and the slowdown in the US also appears to have scuppered the expected exporting of capital from Japan."
"Japan has yet to record any foreign bond buying since the start of the year. The latest weekly data revealed another net sale worth JPY 617bn and the total repatriation back to Japan this year now stands at JPY 3,964bn."