USD/JPY: Neutral view - Westpac

With another BoJ meeting next week comes another opportunity to tweak the current ‘around zero’ and or ‘annual pace of increase in JGB holdings of about ¥80tn’, according to Robert Rennie, Research Analyst at Westpac.

Key Quotes

“Neither seem likely but that will not stop market participants from speculating as such, a factor that is probably adding a bit to ¥ strength right now.”

“The other factor of course is the that ¥ hitched a free ride on a weakening US$ last year and even with recent USD/JPY, the ¥ is cheap.”

“Thus even with our collective view of a stronger US$ into the March 20/21 FOMC meeting, its not clear to us that USD/JPY is a pair that will benefit.”

“We have a neutral view for the week ahead but still see risks of another test of 106 on the basis of the above arguments.”