EUR/JPY was hit last week by rising uncertainty on Italian politics, but given the extent of BTP-Bund spread widening, the reaction of EUR/JPY has been relatively muted, according to Yujiro Goto, Research Analyst at Nomura.
Key Quotes
“It appears our initial assessment that EUR’s reaction to Italian politics would be small was generally correct. Market focus is shifting to next week’s monetary policy meetings, where we expect the divergence between the ECB and BOJ to widen further. EUR/JPY has been more sensitive to rate spreads and the expected further divergence in monetary policy should lead to a further EUR/JPY recovery.”
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