Home JPY: Twist to the YCC – Nordea Markets
FXStreet News

JPY: Twist to the YCC – Nordea Markets

Analysts at Nordea Markets suggest that it is no secret that the JPY yield-curve has re-steepened versus peer yield-curves, since the slight twist to the YCC was first rumoured.

Key Quotes

“So far the reaction in JPY has been limited (at least to the YCC announcement); Hence BOJ might have succeeded in twisting the curve without explicitly tightening policy from an FX perspective.”

“A material relative re-steepening is maybe not the most obvious driver of FX, but it matters sufficiently much for portfolio flows in e.g. Japanese lifers to play a role in spot moves also.”

“The key person behind the twist of the YCC seems to be CTO of BoJ Masayoshi Amamiya, who has a big influence on Governor Kuroda (Almost the Per Jansson of BoJ). And there are signs that Amamiya means business, as a new move towards a +/- 40 bp trading range for the 10yr point has already been mooted. While we judge that Bank of Japan wouldn’t welcome a positive repricing of the JPY (which could be prevented by buying a lot of shorter JGBs), they risk it by moving further in this direction.”

“The loyal reader also noted that USD/JPY was the only G-10 USD-pair that didn’t perform at the latest “Sumo-SOMA-day” (15th of August).”

“If Amamiya means business, you shouldn’t rule out a move in USD/JPY that compares to the 2017 development in EUR/USD.  We stay long the JPY via our short NZD/JPY position.”

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.