No BoJ easing expected, Yen to remain weak – Deutsche Bank

By FXStreet FXStreet (Bali) – Taisuke Tanaka, Strategist at Deutsche Bank, notes that the Yen should remain weak even if BoJ foregoes further easing.

Key Quotes

Following the bank’s decision at its 30 October meeting not to ease further, the general market consensus is that it will keep policy unchanged this week as well.

BoJ Governor Haruhiko Kuroda remains bullish on the course of the economy and prices. If the bank were ease under such circumstances, its consistency would come under question.

Nobody in the market can completely dismiss the possibility of a surprise at the meeting given the low likelihood that the bank’s 2% price stability target will be met and the tendency of Kuroda and other reflationists to determine policy.

We believe that the conditions for another BoJ easing over the medium term are a reduction in inflation expectations, technical problems in maintaining QQE, or both. Lower inflation expectations could occur in the event of a drop in domestic demand, a slowdown in the US and greater uncertainty in China/EMs, which could easily set off a stock market downturn, falloff in commodity prices and stronger yen.

At the moment, the US economy is solid, China risk is being monitored, …read more

Source:: FX Street