29 Apr 2015
Limited expectations for BoJ easing - Nomura
FXStreet (Bali) - Yujiro Goto, FX Strategist at Nomura, notes that expectations for further BOJ easing this week are limited.
Key Quotes
"BOJ watchers’ expectations for easing at the BOJ meeting on Thursday remain limited, according to the survey by Bloomberg (20-25 April). Only two of the 34 researchers (6%) expect the BOJ to ease this week, showing expectations are slightly lower than a few weeks ago"
"Expectations for additional easing by the July meeting inched up though. Weaker economic data for Q1 may have increased expectations for earlier easing in July, not in October."
"According to the survey, consensus expects the BOJ's updated inflation forecast to be +2.2% for FY2016 and +2.1% for FY2017, while BOJ watchers’ own inflation forecasts are much lower (+1.1% for FY2016 and +1.25% for FY2017 on average)."
"Thus, the market would probably not be surprised if the BOJ presented an optimistic forecast of above 2.0% inflation for FY2016-17."
"As suggested by other surveys, the market is likely to be sceptical about optimistic inflation forecasts by the BOJ. Thus, tapering fear is unlikely to increase materially if the BOJ releases an above 2% inflation forecast for two consecutive years."
"Low market expectations for BOJ easing this week, also suggested by small JPY short positions, would limit the downside risk of USD/JPY if the Bank disappoints the market as we expect."
"Lastminute JPY selling into the meeting is still possible, as some investors see the riskreward of JPY shorts into the meeting as attractive, especially as October’s easing decision surprised the market."
"Thus, we think USD/JPY volatility is possible over the next few days, while we believe the medium-term trend of gradual USD/JPY appreciation will remain intact.
Key Quotes
"BOJ watchers’ expectations for easing at the BOJ meeting on Thursday remain limited, according to the survey by Bloomberg (20-25 April). Only two of the 34 researchers (6%) expect the BOJ to ease this week, showing expectations are slightly lower than a few weeks ago"
"Expectations for additional easing by the July meeting inched up though. Weaker economic data for Q1 may have increased expectations for earlier easing in July, not in October."
"According to the survey, consensus expects the BOJ's updated inflation forecast to be +2.2% for FY2016 and +2.1% for FY2017, while BOJ watchers’ own inflation forecasts are much lower (+1.1% for FY2016 and +1.25% for FY2017 on average)."
"Thus, the market would probably not be surprised if the BOJ presented an optimistic forecast of above 2.0% inflation for FY2016-17."
"As suggested by other surveys, the market is likely to be sceptical about optimistic inflation forecasts by the BOJ. Thus, tapering fear is unlikely to increase materially if the BOJ releases an above 2% inflation forecast for two consecutive years."
"Low market expectations for BOJ easing this week, also suggested by small JPY short positions, would limit the downside risk of USD/JPY if the Bank disappoints the market as we expect."
"Lastminute JPY selling into the meeting is still possible, as some investors see the riskreward of JPY shorts into the meeting as attractive, especially as October’s easing decision surprised the market."
"Thus, we think USD/JPY volatility is possible over the next few days, while we believe the medium-term trend of gradual USD/JPY appreciation will remain intact.