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The Bank of Japan (BoJ) left policy unchanged. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes the JPY view.

No BoJ surprise, just bulls still suffering

Governor Ueda has made veiled threats of intervention, but has otherwise offered no signs of a rush to tighten monetary policy. The governor leaves the impression that only a further weakening of the yen or a distortion of the curve would cause any rush to act on the YCC. The contrast with the ECB sending out a clearer warning that yesterday’s hike is quickly followed by another hike is clear and reflected in EUR/JPY.

I think USD/JPY should be below 135 now and heading towards 130 later this year, but may have to go higher first. As for EUR/JPY, shorting the pair has the same downsides, but it doesn’t seem to match the rates.

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