Ahead of the upcoming Bank of Japan (BoJ) monetary policy meeting, Rabobank analysts They said they expect the BoJ to raise its inflation forecasts and lower its growth expectations.
We see that the USD/JPY will return to the 130 area in the second quarter of next year
“If USD/JPY were to spike to 145 or higher, the inflationary impact of the BoJ’s easy policy would be greater and market speculation that the BoJ might capitulate on its FJ policy would likely increase.”
“In our view, the prospect of lower US yields and the yen’s own safe-haven credentials could allow USD/JPY to move away from the 140 zone in the coming months. This would allow the Bank of Japan signs of wage inflation may allow the BoE to tighten its CCP policy as early as this fall, although signs of slower global growth could reinforce the BoJ’s decision to hold off on any policy tightening until next year.”
“We see USD/JPY holding around current levels on a 1 month view. We see USD/JPY going back to the 130 area in Q2 of next year assuming the market could be expecting a more relaxed policy from the Fed.”
Source: Fx Street
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