Analysts at TD Securities noted that speculation has run rampant on a possible shift instance at the upcoming BoJ meeting following press reports citing some concern over the feasibility of its easy policy and risk to financial stability.
Key Quotes:
“Though the Bank has in the past engaged in shock and awe policy, this is one side of the surprise that the Bank does not want to be on.”
“We expect no change at the upcoming meeting and USD/JPY to be tactically supported towards 112.50/113.”
“We nonetheless think that the communications strategy will evolve to eventually prepare markets for a tweak (far) down the road as JGB conditions have become increasingly challenged at a time when the demographic crunch will lead to natural demand for long-end product.”
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