BoJ: Policy unchanged, long USDJPY suggested – Deutsche Bank

By FXStreet FXStreet (Delhi) – Taisuke Tanaka, Strategist at Deutsche Bank, suggests going long on dollar/yen after the BoJ policy meeting today decided to maintain current policy.

Key Quotes

“Since about 40% of leading analysts had expected further easing, we thought this decision could lead to some disappointment-driven pullback for the dollar/yen, and viewed this as a prime opportunity for buying on dips. The dip of 50-60bp was over in no time, and the market was quick to recover it.”

“In the new projection report, the BoJ maintained the view that the economy is recovering moderately and that prices excluding energy remained on a rise. Accepting the impact of weaker crude oil prices, however, they pushed the timetable for achieving the 2% inflation target out to 2H FY2016.”

“Considering that the BoJ’s 2% inflation target looks difficult to achieve and that Japan’s economy has stalled, as well as dovish bias in the Eurozone and China, we think market expectations for additional easing will likely surface repeatedly going forward.”

“We think many analysts will likely be unable to ignore the penchant for surprise shown by the BOJ’s reflationists such as Governor Kuroda and as attested by QQE1 and QQE2. We think the dollar/yen rate will continue to …read more

Source:: FX Street