USD/JPY: the BOJ meeting

The Bank of Japan starts its 2-day policy meeting tomorrow. In June the central bank didn’t extend the length of loans it uses to smooth volatility and stuck with a pledge from April to increase the monetary base by 60-70 trillion yen per year.

Analysts at NAB say that Japanese government bonds are now stable, so there’s no pressure for the central bank to change policy. According to Bloomberg, this time the BOJ officials will discuss upgrading their assessment of the nation’s economy by using the word “recover” for the first time in more than 2 years.

The long-term trend remains bullish due to the difference in the US and Japanese monetary policy. Still the pace of yen’s depreciation has slowed down due to some selling of call options which grant right to buy a currency.

Scotiabank: “The macro dynamic and monetary policy dynamics are still suggesting yen weakness is the game to be playing. We’re still looking for 105 by the end of this year.”

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