JPY: BOJ unlikely to put the brakes on - Nomura

Analysts at Nomura notes that the rising USD/JPY trend continues and this is a clear tailwind for the BOJ and the Bank is unlikely to put the brakes on anytime soon.

Key Quotes

“The BOJ meeting next week is likely to be uneventful, as expectations for an immediate easing are low. We think the FX market’s reaction will be muted. The BOJ’s implementation of yield curve control is key for further JPY weakness. We think JGB yields will be capped by the BOJ’s strong commitment to yield curve control for the time being, weakening JPY further into 2017.”

“Although the Bank may be slightly more positive on its outlook thanks to positive external developments, its dovish stance will likely remain intact. A muted USD/JPY reaction is likely again.”