Analysts go bearish on JPY

On Friday the Bank of Japan unexpectedly announced additional stimulus measures to push monthly asset purchases to 80 trillion yen, from the previous target range of 60 trillion-70 trillion. This way the BOJ aims to make inflation reach its 2% target. In addition, Japanese officials unveiled reforms to the $1.2 trillion Government Pension Investment Fund (GPIF) that increased allocations to stocks and overseas assets by more than expected.

Analysts at NAB point out that the BOJ has chosen a very good time to ease policy as the Fed has just ended QE3. The changes in GPIF add to the picture and set a bearish trend for Japanese yen and a bullish trend for USD/JPY.

Societe Generale says that a break above 112.80 opens the way up to 115.00 and then to 2007 high above 123 yen. Strategists at JP Morgan predicted the dollar would rise to 120 yen by Sep. 2015.

This week pay attention to the BOJ Governor Kuroda speech and the BOJ meeting minutes release on Wednesday.


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