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Robert Rennie, analyst at Westpac, suggests that over the last three weeks we have seen some very clear indications that the BoJ is gearing up for some potentially significant announcements at the October 30/31 meeting.

Key Quotes

“The most obvious of these of course was the Sep 19 MPC statement which noted that “Bank will re-examine economic and price developments at the next MPM”.”

“Over and above this, recent action from the BoJ to cut the 25yr+ purchases to 0-50bn (versus 10- 100) and 50-200bn (versus 100-250bn) for 10- 25yr emphasises that the BoJ really is willing to put its money where its mouth is.”

“While this has much to do with trying to steepen the yield curve, various speakers including Kuroda and Funo have suggested that a number of options are open for discussion at the “very important meeting” at the end of the month.”

“We maintain our negative medium-term view for USD/JPY, but given recent price action and risks surrounding US-China trade talks and US-Europe ‘trade discussions’ over the next few weeks, we would tend to use strength above 108.50 as an opportunity to sell.”