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11 Nov 2014
Uncertainties Weigh on JPY – TD Securities
FXStreet (Barcelona) - The Forex Research Team at TD Securities view the USD/JPY path higher to be risky in lieu of the uncertainties revolving around the BoJ policy outlook.
Key Quotes
“Concerns that Japan’s fiscal reform efforts are stalling and that PM Abe may call a snap election if he decides not to push ahead with the second-leg of the proposed sales tax increase in 2015 have weighed on the JPY through the overnight session.”
“USDJPY traded through 116 briefly, the highest level seen since 2007.“
“These uncertainties are clear JPY negatives on the face of it but the broader outlook for USDJPY will hinge on the BoJ’s response to the government’s fumbling of the sales tax increase—inflation expectations and inflation may edge lower as a result of the delayed sales tax increase but, without more obvious efforts to rein back Japan’s sovereign debt burden, the BoJ may be reluctant to provide further monetary stimulus—as well as where US yields head from here.“
“We think the longer-term direction in USDJPY remains higher but, with US nominal yields reluctant to move up and the BoJ policy outlook perhaps a little more uncertain, USDJPY’s path higher is not without risks.“
Key Quotes
“Concerns that Japan’s fiscal reform efforts are stalling and that PM Abe may call a snap election if he decides not to push ahead with the second-leg of the proposed sales tax increase in 2015 have weighed on the JPY through the overnight session.”
“USDJPY traded through 116 briefly, the highest level seen since 2007.“
“These uncertainties are clear JPY negatives on the face of it but the broader outlook for USDJPY will hinge on the BoJ’s response to the government’s fumbling of the sales tax increase—inflation expectations and inflation may edge lower as a result of the delayed sales tax increase but, without more obvious efforts to rein back Japan’s sovereign debt burden, the BoJ may be reluctant to provide further monetary stimulus—as well as where US yields head from here.“
“We think the longer-term direction in USDJPY remains higher but, with US nominal yields reluctant to move up and the BoJ policy outlook perhaps a little more uncertain, USDJPY’s path higher is not without risks.“