JPY news - page 21
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Japan - Services PPI (September): 0.3% y/y (vs. expected +0.2%)
The services PPI is not generally much of forex market mover
- Expected +0.2%, prior +0.2%
M/m is 0% changeUSD/JPY: Some Pullback To Hedge Rallies Above 105
USDJPY has rallied nearly 5% since bottoming out in the early fall. The question is now whether to fade the rally or chase the momentum. We suspect it is close to carving out a top so are cautious about chasing the rally further. A lowfrequency model that incorporates the current account and the 5y rate spread pegs fair value around 95. This contrasts with the high-frequency models that peg USDJPY around 106.
We still think the balance of risks are lower USDJPY in the nearterm given 1) the Fed’s gentle tightening cycle and 2) scope for the BoJ to remain on hold. We also note that most technical indicators argue for some pullback in USDJPY ahead of the 105 level.
Finally, recall that the recent Tankan report showed that corporates expect an average rate near 108, so there is scope for renewed interest in hedges to cap rallies above 105.
source
Japan press says the BOJ mulls delaying 2% inflation target to FY 2018
Bank of Japan headline
USD/JPY: Topside Heavy Into 105.50 As Investors Unlikely To Take Bold Risks
USD/JPY – NEUTRAL BIAS – (103.00-105.50)
The recent rise in USD/JPY has been driven mostly by USD strengthening. JPY selling pressure has been fairly weak. Overall USD long positions are at a recent high. USD/JPY may rise above 105 over the near-term, but topside may be heavy at around 105.50 due to the weakness of JPY selling.
We expect the BoJ to keep monetary policy settings intact next week. Board members must confirm the progress with controlling and managing the JPY yield curve. They have to make consensus for the reality of JPY yield curve control, JGB purchase to taper further.
Most Japanese investors, especially pensions and lifers, want the JPY yield curve to normalize, since a too-flat curve hurts their investment performance and revenue. At this stage, investors are unlikely to take bold risks.
source
Japan headline inflation data (September): -0.5% y/y (expected -0.5%)
USD/JPY: Coiling For An Up Move? Levels & Targets
As we head higher in US yields; prepare for a Fed rate hike in December; retain some possibility of renewed Japan stimulus and expect a US Equity market “melt up” into year end, the picture looks constructive for a push higher in USDJPY.
We have already confirmed one double bottom with a daily close above 104.32, and that pattern target gains towards 108.50. Such a move, if seen would open up the possibility of a larger double bottom forming /55 day moving average break on a close above 107.40-50
Such a close, if seen, would suggest extended gains towards 114-116.
USD/JPY forecast for the week of October 24, 2016
The USD/JPY pair initially fell during the course of the week but turned around to form a little bit of a hammer. The 105 level above is massively resistive, but I think we are going to eventually build up enough momentum to break out. Once we do, I think we go to the 107 level, and then much higher than that. I believe that pullbacks continue to offer buying opportunities as they will be looked at as potential value while we build up a bit of a base in this marketplace.
Japan: Sep. (prelim.): Industrial production 0.0% m/m (expected 0.9%)
Japan data
BoJ Meeting:
BofA Merrill: A Prolonged Pause; Buy USD/JPY Dips Into 2017.
At its 1 November meeting, we expect the BoJ to keep all policy settings on hold. The policy board looks poised to downgrade its inflation forecasts and delay the timing of 2% inflation further. But this has been widely telegraphed by the central bank over the past week and should not be cause for surprise. While we expect little new from this meeting, it provides a good opportunity to step back and look at the economic and policy outlook. We continue to expect the BOJ to keep its foot planted on the accelerator, but not offer new easing measures unless there is a deflationary shock. In our view, the ball is now in Prime Minister Abe's court to deliver sustained fiscal easing to ensure that the BoJ's efforts gain traction. Next month's US presidential election likely will be the key driver of USDJPY over the short term as the election outcome will have quite binary implications on JPY. If the Republicans win the presidential race, JPY is likely to rally significantly short term amid risk-off trading. If the Democrats win, the market reaction is likely to be limited as it has been largely priced in. Gridlock in the congress would have negative implications on USD while a clean sweep - one party winning the presidential seat and congress - by either party would support the currency. That said, depreciation into 2017 is strong so that we would be buyers of USD/JPY's dip rather than sellers of USD/JPY's strength.
Credit Agricole: BoJ A Relatively Tame Affairs.
The 10Y JGB yield has averaged about -6bp since the BoJ introduced its Yield Curve Control (YCC) and its target of 0.0%. Rhetoric from BoJ officials suggests that it will not adjust policy settings in the near term, so this week's meeting should be a relatively tame affair. Our economist expects that the BoJ's inflation forecast outlook will be lowered, but its real GDP growth forecast outlook will be left broadly unchanged. The rhetoric around when the BoJ expects to achieve its inflation target will be watched by the market. Our economist indicates that the BoJ continues to anticipate that it will reach its 2% inflation target during fiscal 2017 but, like the market, it looks for an eventual delay. A delay at this meeting would be a modest surprise and be interpreted by the market as reducing the chances of further stimulus by the BoJ, which would be mildly JPY positive. We think that the more important event for the JPY will be the publication of the BoJ's schedule for Rinban operations in November, just after the outcome of the BoJ meeting. This release is where the BoJ will show its tolerance for deviation in the 10Y JGB yield from its 0.0% target. Signs of significant tapering of JGB purchases by the BoJ would push JGB yields higher and weigh on the USD/JPY.
BNPP: BoJ A Neutral Factor; We Target USD/JPY At 108 By Year-End.
We expect the Bank of Japan to leave policy unchanged at this week's meeting after switching to a yield curve targeting regime at its previous meeting. Our economists note the Bank may abandon numerical guidance on its pace of JGB purchases, but only because the guidance has become superfluous given the new yield curve targets. With the BOJ's new framework now understood by markets, we would not expect a significant reaction to this. The Bank's quarterly outlook may also push back the timing for achieving 2% inflation by a year, again with limited market impact. We view BOJ policy as likely to be a neutral factor for markets heading into 2017, with Fed policy the main driver of USDJPY in our bullish forecasts. We target 108 by yearend.
Morgan Stanley: Any USD/JPY Setback Into 103 A Buying Opportunity.
Central banks will be in focus this week, with the BoJ meeting today and tomorrow the starting point. While Governor Kuroda and company are not expected to reveal any changes to the JPY80trn/year QE programme, market participants will watch if there will be any projection change of the BoJ's 2%Y inflation target into 2018, which may delay further monetary easing steps. Hence, JPY may rebound in the short term, but any setback in USD/JPY into the 103 handle is viewed as providing a JPY selling opportunity.
Barclays: We Expect No Easing At This Week's BoJ MPM.
The Bank of Japan MPM will be the main focus this week and we revised our baseline forecast to no easing from a 20bp rate cut. On 21 October, Governor Kuroda expressed that the BoJ could extend its "during FY17" ETA for achieving the 2% price stability target while also indicating a cautious stance on further easing. Indeed, 95% of market participants expect no BoJ action this week, according to a Bloomberg survey conducted on 21-25 October. However, markets will also be watching the BoJ's announcement of the rinban operation schedule for November (Tuesday), given the surprise reduction last month. We expect the size of the purchases in all sectors to remain unchanged, given that the JGB curve in the long/superlong sectors has hardly changed since the QQEYCC introduction
SocGen: Staying Long USD/JPY Into BoJ.
We still prefer dollar, longs against the yen to longs vs. the Euro. There are still lots of yen longs out there to squeeze as US rate expectations rise and B OJ policy is well-designed to help yield differentials widen in the favour of the dollar as long as the upward crawl in treasury yields goes on. The only concern is risk sentiment more broadly - I couldn't make a credible case for Yen softness on a trump win..
TD: BoJ On Hold; US Elections Real Driver For USD/JPY.
We expect the BoJ to remain on hold this week. We think the release of the Rinban operations and market sentiment around the US election will likely have more influence over USDJPY this week. The former will indicate the BoJ's threshold of variance around the new yield target.
Japan press: "Japan's GDP up 0.2% in September: think tank"
That is according to the estimates released Tuesday by the Japan Center for Economic Research.
- Private consumption rose 0.3%
- Capital investment up 0.1% (machinery shipments increase)
- Housing investment down 1.2% (3 straight months of falls)
Report carried in the Nikkei press