Yen’s hesitations. Which way to go?
The USD/JPY is now experiencing a choppy consolidation after significant downfall last week. The BoJ is determined to struggle to death to achieve its cherishing goal of 2% inflation rate. With the brand-new monetary policy tool, the BOJ’s official aspire to alleviate the burden of QE imposed on the financial institutions. Earlier today we had a chance to hear the speech of the BoJ’s Governor Haruhiko Kuroda with his comprehensive assessment of the newly introduced monetary policy. Investors’ mood has deteriorated as soon as Mr. Kuroda confirmed that BOJ is determined to push the interest rate even deeper into to the negative territory. According to the Governor, the central bank simply cannot lose momentum to revive the Japan’s economy, when a substantial progress toward overcoming deflation has been already made.
Meanwhile, big stakeholders share ambivalent view on the yen’s future. The Bank of Tokyo Mitsubishi’ forecast stands out of others. According to the bank’s analysts, the JPY might strengthen in a short term in line with trade and capital flows. Nomura Securities has another opinion on this account. It expects the JPY will weaken in the midterm, especially if a range of positive external developments in the US occurs (possible US rate hikes and a reduction in US political uncertainty after presidential elections).
Société Générale doesn’t give us a clear picture of the yen’s future, but comes up with some hints on its further movement. The bank suggests that a rebound towards the highs of September (104 – 104,45) is possible, once USD/JPY reaches the mark of 100. Alternatively, if the bears break through this significant support, the USD/JPY will go down to 95 – 94,8 levels.