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23 Sep 2014
USD/JPY: Japanese policymakers' stance unlikely to cap upside - Nomura
FXStreet (Bali) - Nomura thinks that comments from key Japanese policymakers over the weekend are not enough to cap the upside room for USDJPY at this point.
Key Quotes
"Finance Minister Aso said that there were no particular discussions on exchange rates at the meeting of G20 finance ministers and central bankers over the weekend (Bloomberg). He said Japan will meet its G20 exchange rate commitments, while stating that the currency is now near the level at the time of the Lehman Brothers shock."
"BOJ Governor Kuroda stated that he feels that he received international understanding of the BOJ's policy, and achieving the price goal is a plus for Japan and global economy (Bloomberg). Governor Kuroda also reiterated that the BOJ will continue to implement QQE steadily."
"Separately, Economy Minister Amari said that the BOJ and government should be aligned with each other, while main measures would come from the BOJ if the economy needs more support, during his interview with FT. The comments suggest that he sees benefits from further BOJ easing when necessary, which may lead to further weakness in JPY. Even though last Friday Mr Amari said that abrupt moves in currencies are not good for the Japanese economy, he may not be so concerned about the current level of USD/JPY after the recent rapid appreciation."
"While JPY has weakened against USD at a relatively rapid pace over the past two months, their comments do not show strong concerns about JPY weakness at this point. As the Japanese government still needs to make a final decision on the second consumption tax hike, we judge policymakers have a stronger incentive to support economic momentum."
"Policymakers are still likely to want to avoid sharp appreciation of JPY, which could break the virtuous cycle of the economy. As a result, they may not take the risk of sending a message prematurely that could lead to JPY appreciation. Thus, we do not expect policymakers' stance to cap the upside room for USDJPY at this point."
Key Quotes
"Finance Minister Aso said that there were no particular discussions on exchange rates at the meeting of G20 finance ministers and central bankers over the weekend (Bloomberg). He said Japan will meet its G20 exchange rate commitments, while stating that the currency is now near the level at the time of the Lehman Brothers shock."
"BOJ Governor Kuroda stated that he feels that he received international understanding of the BOJ's policy, and achieving the price goal is a plus for Japan and global economy (Bloomberg). Governor Kuroda also reiterated that the BOJ will continue to implement QQE steadily."
"Separately, Economy Minister Amari said that the BOJ and government should be aligned with each other, while main measures would come from the BOJ if the economy needs more support, during his interview with FT. The comments suggest that he sees benefits from further BOJ easing when necessary, which may lead to further weakness in JPY. Even though last Friday Mr Amari said that abrupt moves in currencies are not good for the Japanese economy, he may not be so concerned about the current level of USD/JPY after the recent rapid appreciation."
"While JPY has weakened against USD at a relatively rapid pace over the past two months, their comments do not show strong concerns about JPY weakness at this point. As the Japanese government still needs to make a final decision on the second consumption tax hike, we judge policymakers have a stronger incentive to support economic momentum."
"Policymakers are still likely to want to avoid sharp appreciation of JPY, which could break the virtuous cycle of the economy. As a result, they may not take the risk of sending a message prematurely that could lead to JPY appreciation. Thus, we do not expect policymakers' stance to cap the upside room for USDJPY at this point."