Analysts at Brown Brothers Harriman point out that the dollar alternated between rising and falling sessions against the yen last week.
Key Quotes
“The inside days recorded on last Wednesday and Thursday was a minor reversal pattern rather than a continuation pattern. The dollar returned toward the week’s high before the weekend (~JPY109.85). It stalled at the 20-day day moving average. The yen did not rally when the BOJ announced that it was reducing its 5-10 yr JGB purchases (to JPY430 bln from JPY450 bln).”
“Arguably the reaction reflects investors’ understanding that this is a not a substantive change in policy or a sign that it is tapering. It may be a testament to the BOJ Governor Kuroda’s communication efforts and the idea that the main criticism from other BOJ board members is coming from those who take more action to ensure the inflation target is reached. We suspect the dollar needs to resurface above JPY110.20. Otherwise, the gains ahead of the weekend will look corrective in nature.”
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