Commitment to keeping yields stable should push JPY/USD higher – Deutsche Bank

According to the analysts at Deutsche Bank, the commitment to keeping yields stable in the face of rising US short-term and long-term yields should push JPY/USD higher even if the BoJ hasn’t kept 10yr yields exactly at zero.

Key Quotes

“This, especially with commodity prices rising and the BoJ’s balance sheet growing quickly again, should help to raise inflation expectations. We don’t expect much by way of fiscal stimulus, but there’s enough momentum in the economy – growth above potential – to expect inflation to rise above 1% by Q3 this year, although we don’t see it reaching 2% without a consumption tax increase. So there will remain perhaps an easing bias to policy, but we don’t expect any change in policy this year.”