Interest has crept back into the market following media reports of growing angst over BoJ policy, notes the research team at TD Securities.
Key Quotes
“A change in stance is unlikely at next week’s decision however, and we would rather view “sources” stories as part of an ongoing BoJ communication strategy to eventually warm markets up to a tweak that is still quite a ways off. The recent fixed rate operation is a shot across the market’s bow that the recent rise in JGB yields is unwelcome and still premature.”
“This means that in the absence of a BoJ announcement next week, USDJPY’s collapse should find support. Our HFFV estimate indicates that USDJPY has some room to correct, though supports near 110.20/50 will be formidable and will present an opportunity to fade as few alternatives exist to check on USD firmness.”
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